Making difficult decisions can help your company rise to the top during the current economic storm.
Looking at the current global economic environment, it sure looks like we are headed for extremely tough times. For those of us involved in the design and fabrication of electronics, the news seems even more disconcerting as idle manufacturing capacity grows by leaps and bounds, making tomorrow’s opportunities seem ever more elusive.
I think everyone would agree that tough times call for tough decisions. I think everyone would agree with that old adage but what decisions, timed when and for what reason we all may be less sure of.
Based on the industry actions taken a decade ago when we faced what I consider to be our economic “perfect storm,” NOW is the time to be making some of those tough decisions. What you need to know is that they are not necessarily the ones that come to the top of the list as being most prudent in times like these.
Unlike the “perfect storm” of a decade ago our current predicament is truly global. What happened a decade ago occurred because of the convergence of the dot-com bubble implosion combined with the trauma of 911 and the manufacturing pendulum swinging hard and fast from the West toward Asia. Today it is affecting all regions of the world – and not because of inventory over capacity of the products we design and manufacture. Our current dilemma is driven by a global drop in confidence caused by the financial community’s over zealous packaging of mortgage and asset-backed securities. Consumers still want electronics and big-ticket items, but they lack the confidence to commit and the ability to finance large purchases.
So the conventional wisdom might be to hunker down, cut back and weather the storm. Most of us attempted doing that a decade back when our industry experienced that perfect economic storm, and some were successful. We, as an industry, made the prudent decision to scale back. We made the tough decision to patiently wait until the business climate returned to normal, and for those of us in North America and Europe, the result was a decrease in the industry by over 50%. Interestingly, the prior “normal” period never returned.
Meanwhile, in other parts of the world, equally tough decisions were being made. Those decisions revolved around determining what kind of a company – what kind of an industry – to aspire to. What industries to serve and what level of investment it would take to become successful were the driving questions that lead to otherwise unheard of companies making tough decisions to invest, build, train and attain leadership positions in our industry. Tough decisions require you to follow your gut, make the calculated risk and the dive in with confidence because you believe!
As I look forward into the next several quarters, I could argue that the tough but prudent decision for my company to make would be to cut a few people from the payroll, freeze all pay for a year, cut capital spending to zero and make the tough decision to hunker down to weather what appears to be a very long economic storm.
Then again, I could make a really tough decision to keep my eyes and ears open. When someone prudently decides to cut staff, I could hire the one or two strategic people I need to further excel. I could decide that this is the year not to cut pay, instead making all employees feel as secure as possible so to get the most from each of them. I could decide to develop new capabilities or identify a new market – geographic or industrial – that will provide the margin and complement my current strengths. I could take what savings exist and invest them in equipment to insure I remain competitive- especially in times when pricing will be challenged and higher yield may make the difference. These are the really tough decisions. Making any or all of them requires confidence, especially in these times when confidence is the most premium of all commodities
If we learned anything from the past, it is that electronics is an industry that is constantly changing, constantly growing, constantly in need of people and companies who will rise to the challenge of developing, designing and building state-of-the-art products. Regardless of geographic location or economic climate, successful companies in our industry cannot afford to just hunker down. Looking back 10 short years, many of the companies that were the industry leaders have been replaced by new companies. Equally, an industry that once had its manufacturing epicenter firmly rooted in the West, now looks to the East for state-of-the-art facilities. Companies that made tough decisions 10 years ago, but are still around today might have made the toughest, riskiest, albeit less “prudent” decisions.
While tough times do indeed call for tough decisions, tough decisions demand confidence and the belief that, like our industry, success is only limited by our ability to take control and lead change. The companies who believe and make those really tough decisions inevitably will be tomorrow’s leaders.
We are in the midst of some really difficult times, and everyone will be making some very tough decisions as we navigate through the challenges and toward the opportunities ahead. Question those decisions but listen to your gut, and when the clouds part and the seas calm, you might see that you have done more than simply weather the storm. PCD&F
Peter Bigelow is president and CEO of IMI (imipcb.com); This email address is being protected from spambots. You need JavaScript enabled to view it.
