Dan Ariens fears stimulus may lead to “Stagflation”

In part of an ongoing series being conducted by Outdoor Power Equipment and its Green Media sister publications — Arbor Age, Landscape and Irrigation, and SportsTurf — Dan Ariens, president of The Ariens Company, recently shared his thoughts about the economy, the stimulus package, and what it all means to the green industry.

OPE: Would you say that the passing of the economic stimulus is positive or negative for the outdoor power equipment industry, and why?

 Ariens: I don’t think the stimulus is good for anyone, including the OPE industry. I would have supported business-like incentives to make consumers both grow in their confidence in their economic future, and provide consumers the opportunity to make the economic decisions on which industries/products/companies will survive. As this stimulus works, we now have the federal government deciding which companies will survive or fail, based on who gets the money.

My incentive would be a tax reduction going to all consumers (wealthy or not); let them spend their own money on the products they choose. That’s a free enterprise solution. Second, I would run the government like a business, and when the revenues fall, unfortunately so does the number of employees; the government needs to cut cost. I realize this is an old-fashioned remedy — but I’m an old-fashioned guy.

OPE: What type of feedback are you receiving from your dealers regarding the stimulus?

Ariens: I haven’t had much feedback from dealers on the issue.

OPE: How has the recession affected your dealers most acutely?

Ariens: Credit. Both floor plan and consumer credit. Dealers are facing a new reality in their balance sheet strength, and need to be vigilant about managing their inventory, and matching that with the demand of the marketplace. Be very careful with your relationship with the floor plan company; we all need to work together to manage through this recession.

OPE: What are you recommending to your dealers — or doing for your dealers — during this economic downturn?

Ariens: This is where business relationships that are true partnerships for a long-term relationship versus those which are just business transactions make a difference. In our business, we help our dealers manage inventory, move slow items to where they are going to sell, and don’t stuff it down the throats of our customers. We match our plant output with real-time demand. Lean manufacturing has been a way of life for us for over 10 years now, and our partners know that in the long run, this is the most effective way to match demand to inventory.

OPE: What is your outlook on the economy long term?

Ariens: “Long term” is now a longer horizon than I used to look. One to three years was my long-term horizon; now, I think we should be thinking in three- to five-year horizons. There is no way to have our sons and daughters pay for this stimulus pork, without severe inflation, coming on the heels of this recession. We may even see a term from the ‘80s we coined “Stagflation,” where we have an inflationary environment and a stagnant economy. My feeling is that to survive, we have to give our suppliers, customers and best employees a very warm bear hug, and team those skills together to make all the right decisions weathering this storm.