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The Downside of Downsizing

Posted May 26, 2011 10:00 AM

The global financial crisis has changed the manufacturing world, and many economists question whether the industrial sector in many countries will be able to revert to its former position. Add to the mix rising raw material, fuel, and energy prices. The result is belt-tightening in many industrialized countries. With the resulting staffing and budget cuts, as well as travel restrictions, will standards development and R&D suffer?

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Guru

Join Date: Jun 2008
Posts: 859
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#1

Re: The Downside of Downsizing

05/26/2011 11:45 PM

Money always flows to its best caregiver--If the product is needed, money will be there--If it is a new long shot idea, with potential, , that has promise, then Venture capital will be there--Again--Money flows to where it is treated the best, with the least amount of risk, with the greatest amount of reward, and the least amount of restriction or regulation--- EXCEPT if you have a illicit alliance with the Federal Government, or the Federal Reserve, or anyone connected to these entities, THEN you will be fine--Barney Franks, Geitner, Dodd, et al, and their ilk, will always be there , for a "donation", and they will leave the light on for you . Mac

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Power-User

Join Date: Apr 2011
Posts: 100
Good Answers: 5
#2

Re: The Downside of Downsizing

05/27/2011 8:34 AM

It is still astounding to me that human beings will so readily ignore the lessons of history and experience.

In the last Bush-allowed recession in 1990-1992, companies downsized (and outsourced) like crazy and Wall Street responded by driving the price of stocks in those companies up.....until someone finally tumbled to the fact that companies got TOO lean and no longer had enough "human resources" to handle any increases in business. Then announcements of cutbacks caused stock prices to fall, although it took upper management another six to nine months to realize that. Once they did, hiring started like crazy.

This time around, companies are repeating the pattern by simply not investing in the future, either in new products or by training/adding staff to handle new business. It was reported last year the US businesses were sitting on the largest cash reserves ever....and it was explained to me that companies were simply being cautious about what to invest in. They were waiting to see which way the wind blows instead of choosing the course to follow.

Doesn't top management realize that by waiting to "see what the trends are" they are actually creating a trend of "waiting to see what happens" -- which of course causes things to not happen. Big money means the companies with it are trend-setters whether they do it deliberately or by default. IMHO, deliberate is better.

The usual way business is taught and people learn to think is such that R & D is hardly ever valued....unless the payoff is completely obvious and will come in 6 months. A technology that doesn't begin to pay off more than two years down the road is nearly certain to be ignored by most businesses, until someone with more gut and foresight shows there is real potential for profit.

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Guru
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#3
In reply to #2

Re: The Downside of Downsizing

05/27/2011 10:57 AM

What's going to happen with the current Obama allowed recession?

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#4

Re: The Downside of Downsizing

10/14/2011 8:52 AM

YES

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