Ingram's CEO says Aussie channel will be touched by the financial crisis

According to Spierkel (pictured), resellers are more concerned now than they were a few months ago about the looming economic climate and the ones who will survive are the resellers that have built up a strong services practice.

"We are in a changing time and everybody has to read the environment very closely," he said.

"If there is less hardware moving through the system for a while, which could be the case, the ones that are doing a better job, in configuration services, application service and software are going to be more buoyant and successful.

“We want to try to work with everybody but those that are changing their model will be in a stronger shape,” he added.

Spierkel confirmed that Ingram Micro saw a 15 percent drop in profits and a 3 percent drop in revenue globally from Q3 last year to Q3 this year.

He said the company announced two small redundancies in June, in Europe and one in North America both of about 60 or 70 people.

Speaking about how the financial crisis will impact Australia, Spierkel claims the channel ‘will be touched’ by it.

“There are some weaker resellers out there and no-one is immune. How steep the decline will be no-one knows for sure,” he said.

“It is likely to be shallow but more protracted than people would like it to be and could last several quarters.

“If you look at the macro economic situation, this country exports a lot and if the export values go down a little bit and export volumes slow, in terms of growth rate it means the average SMB as well as large corporate accounts are probably going to be a lot more cautious.

“It is not inconsistent with what has been going on everywhere else around the world. The IT sector is a microcosm of what is going on now.

“It’s not because Ingram isn’t executing well or the IT industry isn’t robust or strong in its own right.

“Our ability to sell what is products or capital expenditure products is typically going to be a function of how comfortable companies feel that they can invest in infrastructure for productivity gain,” he added.

According to Spierkel, there was a huge downturn in the IT industry from 2001 to 2003, due to Y2K (year 2000) and Internet bubble bursting.

He claims 20 to 30 percent of all VARS ‘went into bankruptcy or got bought out or sold their businesses’.

“That was a huge period of churn and many of those that came through that became smarter business people, leveraging companies like us and not holding much inventory and moving away from selling hardware into services, that has been a trend for the last five years.

"The VAR community is much stronger now than it was six or seven years ago,” he said.

Ingram Micro recently announced a nine percent increase in freight charges and an additional $5 charge on Drop Ship orders.

Defending this decision, Spierkel said the company and its competitors globally have subsidised shipping costs to its customer base for years.

“We don’t get full recovery for it. We saw a period of a year where fuel prices were going up every week and that cost was starting to go up for everybody.

“No-one is happy about it. All we were trying to do was to reflect the market dynamics. And get some degree of recovery for the increasing cost base in our business.

"We have talked to a large number of customers and most of them have said while we don’t rave about this we understand it and we are going to pay it,” he said.

Talking about the departure of Ingram’s current managing director Freeland, who will be replaced by Jay Miley he congratulated him on doing ‘a phenomenal job for the company’.

“But, there are times when every company says we are trying to do some things differently and uniquely and bring some new skills to bear. So with that change point in the company we have executives leaving us and changes all over the world.

“We have a nice transition period here where Guy is being very supportive of working with Jay. Jay comes from New Zealand which has a lot of similarities to Australia and of which Jay is familiar with.

“Change is something you have to embrace,” he added.

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