scene. In our case, the U.S. is experiencing even more of a
negative impact as our currency weakens versus other cur-rencies around the globe making the cost of crude oil even
higher than normal market conditions would suggest. It’s a
bit like a downward spiral effect where as we encounter a
higher cost of energy the worse our economy becomes
which in turn lowers the value of our currency which raises the U.S. Dollar cost of energy and so on. Obviously, the
U.S. must find a way to break this downward cycle of events
otherwise the economic hole will get deeper and deeper.
So, given that we are where we are, what do we do now?
From the perspective of the government the Feds are contemplating an increase in interest rates to combat the
dreaded specter of inflation and to ward off a further
decline in the value of the U.S. dollar. Let’s hope that cooler heads prevail as such action would most likely slow an
already declining economy.
Unfortunately, when the economy turns bad we often see
those companies who act like a turtle and pull back into
their shell and take on a posture of waiting until external
conditions improve (i.e., they cut back on travel, entertainment, training, and implement downsizing in various
areas, and take a position of “riding out the economic
storm” as if it was just a temporary thing). I guess if your
competitors implement this kind of action, this might be an
acceptable option to consider but it isn’t something that we
would suggest. In the current economic conditions, hiding
your head in the sand like an Ostrich will simply keep you
in the dark. Remember, there are a number of company’s
that look at economic conditions such as we see today as an
opportunity to become more aggressive and to take additional market share by being out there on a day to day
basis while their competitors adopt a wait and see, keep a
low profile, take no risk strategy.
In the business arenas that Chemark serves, the advice
that we give to our clients is:
• Accept what you are seeing in the market place as reality and plan accordingly;
• Review your product and market portfolio and make
some hard decisions about which ones to keep and continue to support and which ones you will consider exiting (i.e.,
either as a sell off of that portion of the business or simply
downsizing that particular area);
• Determine if there are those areas within your portfolio
of markets where an alliance or partnership would be a
better option. As the old saying goes, two heads are often
better than one;
• Spend time understanding what is happening in your
markets. Like you, your customers are not immune to what
is happening in the changing economy. They too are contemplating actions, which may make them more viable. Are
Business Corner
STRATEGIES & ANALYSIS
your actions and strategies consistent with theirs?;
• Where possible, consider hedging for your future, large
volume raw material purchases. The high cost of energy
isn’t going away anytime soon. Southwest Airlines has been
doing this with aviation fuel for years and even in this
declining economy continues to stay afloat, financially
speaking;
• It may be prudent to delay some of your expansion or construction plans and to consider placing a hiring freeze on
non essential positions. In this latter area be careful not to
completely discontinue the hiring of new graduates as doing
so will place a blip in your employee demographics which
will flow through your company for many years to come;
• Consider implementing needed training programs. In
good times, finding time to implement training is at best
difficult and in many instances, impossible. Take advantage of the downturn in market activities and pursue
employee skill enhancements. Take a page out of your production area and de-bottle neck your systems and employees, make them more efficient;
• Make certain that you provide highly visible leadership
for your employees, suppliers and customers;
• Take an active lead in the turn around of the economy,
don’t wait for someone else to do it.
There is an old saying that seems to sum up where we
are today: those that do not learn from history are destined
to repeat it. What our country is experiencing today, it has
seen before and most likely these economic conditions will
come again. Throughout our country’s rich history economic downturns have come and gone. Those companies that do
not lose their head, that decide to adapt to the new market
conditions and take appropriate actions will succeed
whereas those companies who are sitting back, waiting for
the good old days to return will most likely become a footnote in history. If you want to change the conditions that
are impacting your company then that change will have to
come from within your own organization, not from the government, not from any outside Guru with the latest theory
and certainly not from sitting back and waiting for the good
old days to return. History has shown that the major
changes that have happened in our country have come from
the hard work, sacrifice and dedication of our people, our
industries, not from any other source.
So, is the economic sky really falling? Our answer is no, but
there are a lot of changes on the horizon. The conditions,
understandings and expectations of the past are no longer
valid in today’s markets. If any company is to succeed in
today’s economy it must adopt policies and an operating style
that is compatible with the new economy. The question of the
day isn’t “is the sky falling”; rather it’s, “economic change is
here, what are you going to do about it”? CW
