Tecumseh Products 2014 Annual Report Download - page 10

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If we are unable to develop successful new products, our sales could be adversely affected and we might not be
profitable.
If we are unable to develop and successfully market competitive products, our sales volumes could be adversely affected and
we might not be profitable. Products in our markets are relatively undifferentiated and new products are continuously
introduced to the market. Our future results and our ability to maintain or improve our competitive position will depend on our
capacity to gauge the direction of our key markets and on our ability to successfully develop products that comply with new
regulations and timely identify, develop, manufacture, market, and sell new or improved products in these changing markets. If
we fail to do so, our financial condition and results of operations could be adversely affected.
Current and future global or regional political and economic conditions, including credit markets, could have an
adverse effect on our sales volumes, liquidity and profitability.
Our sales volumes, liquidity and profitability depend significantly on worldwide economic conditions. Uncertainty about global
economic conditions poses a risk as consumers postpone spending in response to tighter credit, unemployment, negative
financial news and/or declines in income or asset values. The global recession precipitated by the financial crisis and
subsequent weak and uncertain global economy had a detrimental effect on our sales volumes over the last several years, and a
related detrimental effect on our liquidity and profitability. A number of factors, including, but not limited to, gross domestic
product, availability of consumer credit, interest rates, consumer confidence, unemployment levels, debt levels, retail trends,
housing starts, inventory levels, commodity costs and foreign currency exchange rates, generally affect demand for our
products. In the event of financial turmoil affecting the banking system and financial markets, additional consolidation of the
financial services industry, or significant financial service institution failures, there could be a new or incremental tightening in
the credit markets, low liquidity and extreme volatility in fixed income, credit, currency and equity markets and a lack of credit
availability for us. This could have a number of effects on our business, including the inability of end customers to obtain credit
to finance purchases of products containing our products, and failure of derivative counterparties and other financial
institutions. A further decline in economic activity and conditions, or continued volatility in global economic conditions in the
U.S., Brazil, Europe, Asia and the other markets in which we operate could adversely affect our financial condition and results
of operations, including our sales volumes, liquidity and profitability.
Regional economic conditions can also have an adverse effect on our sales volumes and our costs, with a resulting adverse
impact on our liquidity and profitability. The prolonged stagnation and political disruption in the Euro zone, which has
impacted other economies in the region, uncertainties surrounding the conflicts in the Ukraine and the Middle East and
concerns about market fundamentals in many of the world's largest economies have contributed to a lack of growth in each of
these markets. If these uncertainties continue, our financial condition and results of operations, including our sales volumes,
liquidity and profitability could be adversely affected.
If we do not effectively improve productivity and restructure our operations in order to reduce costs and bring them in
line with projected production levels and product mix, we might not be profitable.
If we are unable to improve productivity and restructure to reduce costs we might not be profitable. Our ability to make these
improvements depends on our success in implementing lean manufacturing processes and reducing waste, addressing our
excess capacity and high fixed cost base, optimizing headcount, enhancing the design of our products to increase manufacturing
efficiency and using lower cost materials. Restructuring and realignment of our manufacturing operations and personnel or
system implementations might cause business disruptions and might not result in the expected amount of savings or make us
profitable.
The loss of, or substantial decline in sales to, any of our key customers, including Electrolux or Whirlpool, could
adversely affect our sales volumes, profitability and liquidity.
In 2014, our largest customers, Electrolux and Whirlpool Corporation, both of whom were primarily R&F customers, accounted
for 6.3% and 5.9%, respectively of consolidated net sales. Loss of either of these customers, or substantial declines in sales to
either of them, could have an adverse effect on our sales volumes and our resulting profitability and liquidity. Generally, we do
not enter into long-term contracts with our customers, making it easier for the customer to change volume among suppliers.
Larger customers may also seek to use their position to improve their performance by various means, including improved
efficiency, lower pricing and increased promotional programs. If we are unable to meet their requirements, our sales volume
and related profitability and liquidity could be negatively affected. Additionally, the loss of market share or financial
difficulties, including bankruptcy, by these large customers could have a material adverse effect on our liquidity, financial
position and results of operations.