Procaps Lose Wal-Mart!!!!

[Robbo]

Bye bye Procaps? ..... buy buy Procaps?


It seems Procaps has lost its long standing contract to supply Wal-Mart with paint .... Kee Action Sports now assumes control of that contract and look to consolidate their ever-increasing position in the marketplace.
Procaps has had a rough time of late as it struggled to shuffle off the coils of recession that have been strangling this company over the last few years.

They have had a torrid time of it for sure as they seemed to have tried every corporate trick in the book to turn the tide and transform the bottom line business into something that looks altogether healthier but I’m afraid the writing on Procaps’ wall looks ominous, to say the least.

Also in Montreal, we now have Procaps’ arch nemesis, Richmond Italia [original owner of Procaps] gearing up a dozen machines to churn out container after container-load of paint into the marketplace and so the paint-selling landscape looks decidedly inhospitable for any company seeking to gain an increased market share or a larger margin ... in fact, it couldn’t be a worse time to lose one of your major supply contracts, it really couldn’t.
I have always believed Richmond would always return as a White Knight to save the company but the powers inside Procaps towers have always strenuously resisted such an embarrassing homecoming.
Mind you, Richmond had never entirely let go of his interests in Procaps and hung on to a fair sized chunk of the company in terms of shares owned and so this situation must create ambivalent feelings in him as he now watches from the sidelines.

Mind you, a straight buy back by Richmond has always been resisted because of a problem with the price as against the principle because in my experience, big investment corporations have little to no principles; their raison d'être is the 3 ‘M’s ..... money, money, money.

If Richmond had offered what they thought to be the right amount [and then some] I think they would have sold long ago but maybe it was the ‘and then some’ that divided them which would be tragically ironic if true.
Still, this all beggars the question as to whether or not this will prove to be the straw that broke the Procaps’ back?

I would have said prior to them losing this contract, they wouldn’t have been healthy enough to cope with such a loss and nothing has really changed this view, and so, I believe we will now begin to witness the final and tragic death throes of Procaps.
I'm afraid the hierarchy within Procaps will wake up one day and as they go to get out bed, the carpet will be whipped from under them faster than a shot on a pro player's jersey.
The decision for continuance [or not] is made way up the corporate ladder, way out of sight of the Procaps people ...
Procaps is owned by a huge investment company and so these people make decisions based solely upon the present state of company and the predicted state of the marketplace; it doesn’t take much to work out what the nature of those predictions will be.
Consequent conclusions and decisions are equally predictable if things stay the same.
We could of course see someone swoop in to take over the reins of Procaps but any room for financial manoeuvre has been drastically reduced leaving them prone to a buy-out well below what they would have expected.
This type of situation normally lends itself to one of the other big boys dropping in with all the subtlety of an anvil, people like Kee will no doubt be watching this all unfold like a hawk .. waiting for the right moment.
It certainly makes financial sense for someone like Kee or indeed Richmond to buy them out but commonsense at this stage of the game is like rocking horse doo doos and we will have a few interesting months to see where the sh!t lands after it hit the fan on hearing Wal-Mart’s business went on the missing list.

Bye bye Procaps? ..... buy buy Procaps?

 

[Furby]

Long standing contract? It was for a year or so, wasn't it?

 

[JUNIOR BROWN]

Pete and his way with words! ;-) I do miss reading PGI every time I read something from the man himself.

The rumor first broke about 5 days ago on my site and a few people have added their thoughts (HERE)

Just like Pete said it’s going to be an interesting few months if you follow the paintball industry. And we all know as soon as JT lost the Wal-Mart contract last November to ProCaps, JT Sports were sold to KEE Action Sports very soon after!!!

JB

 

[Procaps.Sean]

Pete, Procaps never based it's business model selling to Wal-Mart, unlike JT and they went bankrupt. We were fine before them, and we will be fine after. We only had the account for over a year. Procaps has hired on more sales staff also and we are going to focus on long term and where we believe the future growth of our sport is, which are the paintball fields and stores. As a matter of fact, Procaps has put in large investment going into our plant for improvements to better serve our customers in to the future and also lots of new stuff. 2011 is going to be the year of DXS and VForce...


Sean Scott
International Sales
sean.scott@procapsdirect.com

 

[Reiner]

we are going to focus on long term and where we believe the future growth of our sport is, which are the paintball fields and stores.

Sean Scott
International Sales
sean.scott@procapsdirect.com

Good to hear.

 

[Missy-Q]

Didn't Sean join those guys, like, last week?

 

[Robbo]

First off Sean, many thanks for stopping by and endeavouring to put the record straight but I must take you to task on a few things mate.
Firstly, I will readily declare Richmond is a friend of mine but he doesn't own me in any way shape or form, I am not on his payroll, and I am certainly not looking to ingratiate myself with him; the point of this declaration?
To acknowledge my connection with him; anyway with that out of the way, I'll crack on with my response.

Firstly, my use of the word 'dozen' to describe the number of machines that you brought into question and consequently suggested was inaccurate ..... I talk to Rich now and then and the last time I talked to him was at the recent Paris Millennium event a few weeks ago and he was outlining his expansion plans to me ... he told me he had four machines running at present but had plans to, and was 'gearing up' for over a dozen machines to be running to satisfy the projected demand for his products.
Now, this was the sentence where I used the word dozens:-

‘Also in Montreal, we now have Procaps’ arch nemesis, Richmond Italia [original owner of Procaps] gearing up a dozen machines to churn out container after container-load of paint into the marketplace’.

‘Gearing up’ in this context was used to describe his plans for the future because I used it in its correct form which is to express a process ... ‘gearing up’ is a dynamic descriptive and therefore entirely accurate .... just saying !
I never meant, or indeed suggested that Rich had a dozen machines working now!

And as for any company’s business model being reliant upon one customer is insane economics Sean and would be the model of a nutcase, once again, I never suggested or even inferred you guys had based your model upon Wal-Mart Sean.
My point was, over the past four years or so, we have borne witness to the most acute contraction the market-place there has ever been.
Suggested degrees of contraction quote a 70 % reduction in base turnovers across the board and in such times, each and every customer is a precious commodity.
Whilst you may not have focussed your company ethos around Wal-Mart’s business, you will have lost a large amount of turnover when compared to other customers of yours.
Losses like this, at times like these can prove to be the straw that breaks the camel’s back .. that was my opinion Sean.
As for the remainder of your response?
I think maybe it’s what I would expect from any representative of your company but I seem to remember somebody talking about rearranging some deck-chairs somewhere ..

Anyway, once again Sean, thanks for the reply, it was much appreciated.

 

[Robbo]

Didn't Sean join those guys, like, last week?

I think he did, leastwise that's what I heard; it seems somewhat presumptuous that he is now talking for Procaps after being there for such a short time.
Either it's an example of corporate desperation or maybe even a new employee getting a tad above himself .. either way, things don't look good to me.

 

[Furby]

For the record:

http://thefordreport.com/2010/10/sean-scott-joins-procaps-direct/

As for Sean 'representing' the views of a company, I think at the very least he can represent the views of his division, which is South America....not exactly a small area. And certainly not one facing the tepid outlook that the US is right now...

In either event, I'm going to be in the UK next weekend, and if you're anywhere near Birmingham, I wouldn't mind having a beer with you, Robbo.

 

[Robbo]

It would seem as though Sean from Procaps has edited his original post, either because he was rapped over the knuckles for being a naughty boy and adopting an inappropriate position of Procaps spokesperson ... or indeed for indulging himself in this thread when the politically expedient thing to do was to clam the hell up and not fuel any flames .. the latter possibility seems the more likely though I do feel his self-appointed position was somewhat audacious being as he’d only been on the firm for 5 frikkin minutes.

Still, no matter .. I think though he did bring up some points that should be responded to by myself because I would certainly not wish to be thought of as some sort of doomsayer or even a malicious critic who possessed little to no reason for holding such an opinion.
My opinion being, we are now witnessing the death throes of one of our sports largets paintball manufactures.
Sean made the point that the loss of Wal-Mart’s business wasn’t going to significantly injure Procap’s abilities in any way though it may well prove useful to learn Procaps has had been selling paint to Wal-Mart for I believe, something like 10 years or so.

I’m not privy to Procaps business profile but I think I’m right in suggesting that Wal-Mart was approaching 25% of their total sales and with Richmond’s new company coming into the marketplace and gouging another reported 25% from Procaps sales-sheets, it don’t take no Milton Friedman to tell us they’re in trouble.

Rather than, they’re up the proverbial creek without a paddle, these guys are up the creek without a frikkin boat; and so why do I seemingly exaggerate when they are self-evidently still trading?
In normal circumstances, that last little proverbial ‘boat’ indulgence would be an exaggerated reaction but these circumstances ain’t normal ... these circumstances are extremely rare.
There are two major reasons why I think they are in serious trouble; firstly, this economic environment doesn’t lend itself to market expansion, in other words, Procaps will find it exceedingly difficult to increase their turnover via an associated increase in the number of customers they have.

Those customers are just not there at the moment and the ones that are there, will be more than looked after by their existing supplier who is equally desperate to keep them.
Procaps will also find it night on impossible to increase turnover by selling more product to their existing customer base .. to do that, you have to expand your product line and that requires huge investment ..... not really the best time to go asking daddy for recapitalisation is it.

Secondly, if Procaps are to survive this recent sales shortfall then they need to downscale accordingly and this is, by its very nature, always in a lag position.
Basically, each and every company will have an expense portfolio that reflects the amount of business they enjoy .. the more business they do, the more employees they need, the larger premises and more machines etc etc ... you have to capitalise the business to make sure you have the required infrastructure to optimise profit levels for those sales figures ... if those sales figures drop by say, a nominal 50% then you have to get yer finger out real quick and start cutting costs or those expenses are gonna overrun you like a tsunami.
Just because your sales figures are down doesn’t mean the landlord is not gonna expect his rent or the employees their wages ... ironically cutting costs, costs money .... if you gotta lay off people, you gotta pay them off; if you gotta find new premises, you gotta finance that too... there’s a million and one things that will begin to leech money from you when you begin to see the writing on the wall authored by your company’s elevator attendant .... ‘going down’.


It’s a race against time to become the lean, mean fighting machine needed to survive this present crisis and I do not believe people like molyneux possesses the necessary financial acumen to navigate this through.
You need the support of your workforce to see things like this through and I know one thing, molyneux ain’t no Richmond ... Rich is a people person and Procaps was built up on exactly the type ethos of operation. Of course Richmond looked at the bottom line at the end of every month but to make the be all and end all is financial suicide because it makes you so blinkered as to what’s going on.

molyneux will use his bottom line figures as a route map for his next decision and even though his economics books will no doubt comfort him along the way, this paintball business of ours wasn’t constructed in no economy manual.
I will readily concede this was one of the reasons why we got into so much trouble in the first place but the smart people among us will have no problem in teasing out the wheat from the chaff when looking back over past mistakes and successes.
If Rich was in charge of Procaps now, they’d survive, I have zero doubt in that .. and I can say that not because he’s a mate of mine, I say it because over time, I have seen what he can do; he’s not successful in everything he does but I tell ya something, he learns from everything he does, success or failure ... he also tries very hard not to make the same mistake twice ... Procaps needs a smart people person to turn things round and I’m afraid molyneux is about as subtle, and possesses as much finesse as a pork chop.

Richmond has cultivated a huge number of people who remain steadfastly loyal to him whether he pays their wages or not, you can only do this if you are liked by people ... and to be liked by people you have to treat with them with respect.
That potential workforce of Richmond’s is a huge asset and more importantly, he not only knows it but values it ...
In my opinion, I believe molyneux has yet to develop the social side of business interactions and prefers to judge people and situations by looking at their associated bottom lines, not really the best strategy when you need everybody pushing the same way.

Still, this will all pan out soon enough but whichever way it goes, it’s gonna be tough for everyone left standing, of that I’m sure.