Tuesday, November 29, 2011
Emerging through Tough Economic Times
Emerging through a recession or economic downturn depends a great deal on managing through rough patches and making some key decisions along the way that allow you to come out a better and stronger enterprise.
Most of us have faced the hard reality of acting quickly and decisively with regard to cost structure and continuing operations. Many have moved swiftly to cut expenses and make changes. Changes included practical things and some creative things to cut our overhead, selling and general administration expenses. Tough decisions had to be made in recent years but the best managed firms will emerge smarter, stronger and better companies.
We’re not out of the woods, but we have to hope for and be well-poised for global recovery if not a boom. Confidence is an essential ingredient and the fuel we need as we cautiously move forward with our business plans.
Keep analyzing industry segments. Work with distributor partners. Look for ways to improve productivity, decrease costly downtime (due to things such as welder fatigue) and ways to improve consumable parts life. Industries ranging from construction to shipbuilding will certainly have an impact. Some examples: Commercial and Residential construction and investments in infrastructure may account for as much as 25% the business for welding and cutting hard goods. Oil & Gas/Energy, Transportation, Railroad car production, Trailer manufacturing, Automotive/automotive after-markets, ship-building, aerospace and mining are industry segments that we must understand to better serve metalworking and fabrication needs.
Monitor currency exchanges and changing economies. Currencies, free trade agreements (such as LAFTA and NAFTA) and other global conditions can result in big shifts in demand for products.
Government regulatory issues. Safety, listing agency and government regulatory concerns will always have an impact.
Shifts in skilled labor. Supply and demand of labor and the economic outlook for these various skilled professions will continue to grow. As global economies look at ways to meet demand.
Consolidation of distribution. A trend that will continue to have an impact is the global trend towards consolidation of distributors. Just look at the comparison of Airgas and Praxair versus a few years ago. As key distribution channel leaders get stronger, manufactures and suppliers need to get better and be more responsive.
Product rationalization and product integrity. It is more important than ever. A better and more comprehensive line of offerings doesn’t necessarily mean proliferation. It is important to protect brands/product lines from illegal and inferior knock offs to protect the integrity and trustworthiness of channels and manufactures.
Keep the lines of communications open. Talk time to keep employees informed. Distributor and manufacturers need to have regular meetings and collaborate for business success.
Marketing and advertising needs to be restored. Careful investments need to be made to keep a sustained presence out in the marketplace. Companies who advertise through recessionary periods generally come out on the other end better off in the long run. Social media and other low cost tools are available.
The world is getting smaller. We are seeing a truly global economy. Examples include everything from global sourcing of components and global sourcing of labor to cost containment and manufacturing strategies.
Product innovation. In spite of the economic downturn we must move ahead albeit more selectively, always looking for ways to engineer better, higher performance tools and processes with an eye toward greater productivity.
Training. Everywhere we look, distributors and manufacturers need to get comfortable selling product. End users are screaming for qualified help as they struggle with purchase decisions, application questions and repair functions.