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I am starting this thread on a populist theme at the moment and that is the anticipated downturn in the economy and more specifically how companies may respond to this.
Just to set the scene, according to the contract journal the industry is likely to recede by 8-10% in the next three years (http://www.contractjournal.com/blogs/brickonomics/2008/10/forecasters-see-an-8-billion-d.html)- indeed, if you are a house builder this would seem like optimistic news right now as the housing industry has pretty much stalled.
So what to do! I think there are several key considerations if the recession bites, i)the market WILL become more competitive ii) workload & turnover WILL diminish iii) as a result reducing fixed costs IS A MUST in order to maintain current margins at best and in some cases even survive
In my view, companies have two options. Option 1: The Short Term View - Reduce costs in the traditional way i.e. get rid of non essential jobs (whatever that may be), cut down on luxuries (such as training) and put pressure on suppliers (undermining all the good work done over the past few years developing trusting relationships) Option 2: The Lean Option - Focus on improving productivity - basically get more bang for your bucks, more output value from your input costs, whichever way you look at it, this is the option that achieves the best value for the customer and potentially makes you more competitive. (being more competitive will ensure that you get chosen to do the work that is available)
In addition, the more positive option 2 is more sustainable and it achieves the same goal of cost reduction but by working smart and building on the relationships that have been developed between supplier and customer (or subcontractor and contractor).
Option two has two key issues for companies, one, it is more difficult to achieve and secondly it requires great change. The positive aspect, is that great change comes with great adversity, and the declining economy may just be the sense of urgency required to push through some of the Changes that you have been striving for.
So in short, before you close down your improvement departments, cancel your lean training, think about your options and importantly think about life beyond the recession and becoming fit for the future.