Layoffs, Furloughs, Store Closings, Oh My!

Is it really all doom and gloom out there? For some, yes. For others, they are ‘holding their own’. And even others are prospering. Why the disparity? Could it have been with careful planning over the past 12 months? Maybe it could have been large projects in the pipeline that finally shipped and billed. Or even perhaps just plain luck. Actually, all of the above.

In the staffing and recruiting industry, those of us who specialize in specific industries, such as ours, hear all of the rumors (and some eventual facts) as to what company had the latest staffing issues-good or bad; and what workers finally decided to make some tough decisions on their own for their careers and their families and left their companies.

There are so many reasons why some companies are in ‘survival mode’ while others are growing their base. Let’s explore some of them.

  • Credit risks – Money Management 101: Bottom line is that you must have more money coming in than going out. Those who acted more like the Grinch in either approving new accounts or holding down credit limits may not have sold as much as another aggressive company but their accounts receivables are probably much healthier and stable. Hear Ye: To all the small business owners, Branch and Profit Center Managers: remember that the CFO’s and Credit Managers at the ‘big boys’ probably get the night sweats the same as you in wondering if the A/R days are getting stretched out instead of closing in.
  • Declining sales – Sales 101: The less that is sold means that there is less profit and therefore less money to spend on ‘extra’ things. These ‘fun’ extras can include employee training and travel, holiday parties, customer appreciation events (e.g., lunches, sports tickets, golf outings), to delays in upgrading a facility (e.g., paint, carpet). However, some extras have a direct impact on employees as far as benefits and their wallets. These times have seen the employer matching 401k’s to either be temporarily postponed or cancelled altogether. They have also seen healthcare plan benefits being reduced, cancelled, or their premiums raised.
  • Reputation – Some companies, based on their reputation alone, will survive this downturn and will even prosper. Customers want to go where they feel safe. Of course, getting the best prices, the best service and the earliest deliveries don’t hurt, also.
  • Inventories – As long as companies keep the right inventory and handle the backorders promptly, they will endure. The chain distributors have the leg up due to millions of dollars in combined local inventory and distribution centers, with most backorders handled the next day. The smaller independents need to work harder in determining what A, B & C items to stock and how much. For many, trying to get to the magic seven turns per year per item is a formidable challenge.
  • Diversification – More companies have determined that adding a new industry segment to their business model is what they need to do to survive and even grow. Energy retrofit projects are becoming more popular. The energy market is primed for growth as we have a current political stand of developing new and emerging technologies. These include solar, wind, tidal, biofuels, biomass, amongst others. Those that were on the ground floor a couple of years ago when the wind energy boom started are doing very well now. Is it too late? Not yet-but hurry. The solar industry is really just beginning and there is plenty of time to get involved. In fact, the largest solar energy trade show in the U.S. hits Anaheim later this month ( with over 900 exhibitors! Electric West can’t come close to that anymore. Don’t let anyone tell you that Solar isn’t viable. Just find your niche!
  • Employees – Don’t forget that this is a people business. Without good people, even the ‘best’ companies will falter. Employees want to know that if they are being asked to share in the pain, then management should also. Options that have been used recently have included furloughs (days off without pay, up to one day per month), reduced work hours, and salary cuts. Owners need to make sure that their employees see that it affects them, too. However, not everyone seems to get it. One company recently slashed their employee’s wages, currently at 20%. Understandable during these times, fine. However, two upper management leaders recently went ahead and enjoyed separate multi-week extended overseas vacations and weren’t shy about reveling in the fun they had. The Mediterranean pictures apparently were beautiful. I can only imagine what those employees thought-and are still thinking.

Things will get better for our industry and the signs are here. Unfortunately, there will be store closings or, store ‘mergings’-that sounds much better. Christmas parties are going potluck, sports venues will see less of us, and the ages of retirement, well, let’s just not go there, shall we?

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