Multi-Year Economic Expansion Starts October 2008!
I’ve thoroughly enjoyed Jim Lee’s article on creativity in hard times in APICS e-news (sorry no direct link- go to www.apics.org for a subcription). In addition to offering reasonable approaches to dealing with a downturn he makes a very obvious point that most media seem to forget:
Since World War II, recessions have lasted for approximately 10 months on average while economic expansions have been nearly five times that long. A prudent business strategy should focus on how to cope with the growing pains of a business instead of a market decline.
The media has done it’s best to ignore good economic times when it suits their audience and then to wallow in “never ending” economic downturns. History proves that a long expansion is imminent. Creative, innovative companies are figuring out how to set up for growth. I know- many companies are investing in large technology enablement projects right now in order to leap ahead of their competition when the expansion starts.
Let’s start predicting when the expansion will start. I say October 2008. What do you think?
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(Image source: stockxchng.com)
This particular recession comes on the heels of a marked denuding of the country’s mid-end specialized manufacturing base. Through a systematic process of pushing specialized fabrication of complex engineering and manufacturing off-shore, and turning the economy towards financial services and make nothing business, we have all lost.
Concomitant with this raping of the American specialty of high touch professions, is the pushing up of compensation and benefits toward the top management ranks. If this trend were only to reward for performance, fine. However, we have seen numerous failed companies grant cake to the worst executive offenders.
Alan- interesting connection to price of fuel in latest CFO.com article (April issue) called “Sucking It Up”. They make comment that Hasbro expects 15% increase in costs of made-in-China products due to Chinese vendors relocating parts of supply chains inland to cut labor costs- result is more shipping miles. They are worried that the price of oil, if it “dramatically” increases, might counter benefit of manufacturing in China. We should see a lot of supply chain behavior change as oil prices continue to increase.
Well, in addition, the weak dollar has had a salutary effect on USA exports. The dollar, for most of the past two decades, may have been too strong. But, with many of the best specialist mid-sized USA manufacturers now gone for good (many were family owned), it may be too late.
Alan- “too late” is an interesting thing to ponder. If it starts making economic sense to bring manufacturing “lost” to China back to the US, would only the larger companies do this because start up costs for smaller concerns are just too high? Would you favor a government program to help smaller companies “bring back” this type of manufacturing? I wrote about how India’s living standards are likely also to drive up prices of services like software programming. The same thing may happen soon in China.