Stump Market Minute: April 28, 2020

Today would be the last day of the Spring High Point Market, so we wanted to update everyone on the major themes we are hearing from our clients and friends, based on numerous calls over the last few weeks:

1. Conserve Cash / Survive to play another day:
   a. Cut costs
   b. Evaluate staffing needs
   c. PPP loans
   d. Draw down on lines of credit to build cash reserves
2. Re-Opening – what does this mean?
   a. Safety of employees
   b. Credit quality of customers and vendors
   c. Stability of supply chain to meet production needs
3. E-Commerce:
   a. Permanent shift in consumer purchasing patterns
   b. Clear winners in Amazon, Wayfair, Walmart, Costco, Target, etc.
   c. E-Commerce is pulling many companies through this period of forced retail closures (small and large companies alike)
          i. What is your e-commerce strategy?
4. Positioning for the future:
   a. Re-balance away from China
          i. US resistance to China was on the rise prior to COVID-19 and now will continue as resistance to foreign travel entrenches
   b. North America returns to a domestic manufacturing focus
          i. US/Mexico/Canada accord now in effect
   c. Employment opportunities now for US workers – what will the labor environment look like in 2-3 months
5. Strong vs. Weak: a healthy M&A environment
   a. Expect major distress and business failures
   b. Strong players are seeking additions to factory assets, product lines and geographic reach
   c. Opportunity to bolster management strength and depth
   d. A very strong M&A market for the next 12-24 months