Where to find profits in the cable industry

But did you know that the cable industry has also been glorious in the past.More than ten years ago, the cable manufacturing industry15%-20%The net profit of some cable companies is even higher20%above!But today, the profit margin has dropped to only3%about. That is to say,Over the past decade, the profits of cable companies have declined80%！

Seeing this, I believe many people will ask, where have the profits of cable companies gone? In the era of low profit cables, how should enterprises seek profits?

There are three key profit points in the cable industry: revenue, cost expenses, and raw material prices.

1、 Income

According to analysis, the profitability of China's wire and cable manufacturing industry is lower than the average level of the machinery industry.Overall overcapacity is severe,Low industrial concentration,Weak independent innovation capability,Serious homogenization competition of products,The overall level of product quality is not high, and environmental protection is strictly inspectedMany cable companies are in a state of low profit or even loss.

At present, our country90%The left and right wire and cable enterprises mainly engage in the production of medium and low voltage wire and cable products,Its production equipment and process are simple,The fields such as nuclear power special cables and ship cables mainly rely on imports. Compared to ordinary cables, special cables have higher technological content, updated application fields, and higher added value, so their profits are correspondingly higher.

To increase the contribution of revenue to profits, we need to abandon the path of low price competition, focus on scarcity, and do everything possible to secure orders.Only by increasing the proportion of products in the product composition can cable companies obtain more profits.

2、 Cost expenses

In the composition of cost expenses in the cable industry,Proportion of raw materials80%(Product material control accounts for79%Waste control accounts for1%）Cost percentage15%Artificial occupation5%.

raw material:There are two main parts, one is the control of product materials, which mainly optimizes the quota while ensuring quality, and strictly controls the amount within the quota. The other is the control of production waste, which accounts for about the cost1%Among them, the finished product workshop is the focus of waste control. After the chemical materials are discarded, they cannot be processed again, resulting in high loss value.

cost:The significant proportion of manufacturing expenses in the cost is depreciation, and the reduction of this expense mainly requires increasing production capacity for dilution. In addition to electricity costs, the conductor workshop is suitable for controlling electricity costs, which have a significant impact on its processing costs. The optimization design of current valley and peak electricity prices provides ample room for cost reduction.

administrative expensesMainly controlled by budget.sales expensesIt is more appropriate to use the cost ratio for control, emphasizing the input-output ratio, which not only does not restrict the expansion of the market, but also controls costs appropriately.Financial expenses are currently high due to difficulties in receiving payments and shipping, mainly due to a significant drop in product prices, and purchasing companies are unwilling to pick up the goods and receive payment.

In addition to legal means, customers who want to maintain long-term market relationships can also offer appropriate discounts within the material price dividend, such as cash discounts, to promote payment collection.

Artificial:The proportion of labor costs in the cable industry is very low, less than5%The increase or decrease has little impact on profits. Human beings are the masters of all things, determining the success or failure of all production, sales, and management.

And people have the profit contribution of intangible assets such as wisdom and ideas. A good way is to motivate people to contribute their wisdom, handle every detail well, and reduce costs within their scope of responsibility. Water can carry a boat, but it can also capsize it.

The profit created by income and cost expenses is the profit we can generate in our operations. The cable industry is a sunset industry, with overcapacity and vicious competition resulting in low profit margins. There are legitimate enterprises with certain quality assurance, but the profit margin is very low. According to the industry, it is good to be able to break even.

For growing enterprises that have already invested in production capacity but have not yet opened up their actual production capacity, the profits generated in daily operations are losses.

3、 Raw material prices

Cable industry materials are heavy and light. Price of raw materials (mainly copper) as a percentage of revenue80%，The market price fluctuates greatly. one5%Fluctuations can affect4%The profit.For example, an annual sales revenue36Enterprises with billions of yuan, whose raw material price offers account for30Billion, one5%The market fluctuations will affect1.5Profit of billions, increased by doing1.5A profit of billions, but a loss cannot be achieved well1.5A profit of billions, the difference between the upper and lower levels, will affect3a----8A profit of one point.

How to reduce the cost of raw material procurement is crucial for cable companies to increase their production rate.Compared to copper prices, aluminum prices are much lower and do not fluctuate as much. And aluminum alloy wires are increasingly demonstrating their superior performance, with lower prices compared to copper core cables, and monopolizing advantages in long-distance, large-span, and ultra-high voltage transmission.

Aluminum alloy cables are widely used in developed Western countries, and their usage in Southeast Asian countries is also increasing year by year. However, the current usage in China is less than1%Therefore,Cable companies can reduce production costs by actively researching and developing the technology of "replacing copper with aluminum".

Of course, there are other small factors as well, such as bidding fees, shipping costs, settlement methods, etc