Bear market? How will it affect your company?

[Marc]

Gold

I'm NOT a gold bug. In fact, gold has taken a dive in value in the last month.

Look at gold over the last 5 and 10 years. It's not a bad investment. Like ANY investment, it is a risk.

I own lots of Canadian Maple Leafs.

But while gold is a short term risk, just as 'day rading' in stockes and such is, throughout history those with gold always have had 'money'.

 

[CarolX]

FWIW

I work for a sheet metal job shop - in other words....the bottom of the food chain. We have definitely seen a reduction in the number of orders placed by our customers. This time last year we were working 60 hour weeks. Now we are struggling to stay busy for 40 hours.

Nature of the beast! Feast or famine!!

 

[apestate]

Thanks for not coming down on me too hard for that statement about greed, Wes. I'm entering a dark period and tend to be cataclysmic in my thoughts.

It's an interesting discussion.

 

[Mike Smith]

I feel like a small sailboat tossed around by the ocean going around Cape Horn. How does little ole me protect me and mine from these bear markets? I have seen the value of my 401K drop by 25% in the last 6 weeks. The only way I know is to ride it out and hopefully I will wash up on a sandy beach come retirement.

As to how it will affect my company, it is something that can be managed, though not to the benefit of everyone. This can mean a variety of hard decisions to make such as layoffs or reduced hiring, less capital spending, etc.

 

[Jim Wynne]

The primary problem is people do allow their emotions, rather than their intellects, to dictate decisions where the emotion may lead them into detrimental situations for themselves, their families and the network of people and companies which depend on them for survival.

I think you make a mistake in characterizing emotion as the alternative to intellect. Greed is a character flaw, not an emotion, and low-functioning intellect, or intellect abdicated in favor of greed, is the converse of making wise decisions based on the available evidence and information.

 

[Wes Bucey]

40+ years ago, my dad's company (a large multifacility ferrous and non ferrous metal distributor and service center) ran into a mild recession. The company was closely held by the second generation family of the founder. Instead of laying off personnel, the owners made the decision their employees were too skilled to lose and had faith the recession would soon reverse.

Thus said, every employee was scheduled for an additional task of maintenance or cleaning or painting. Some days would find an entire crew of secretaries and file clerks dressed in company issued coveralls sweeping out dirt and debris from the truck bays.

The recession only lasted a couple of months, but no employees were laid off and the unexpected result was an improved morale and cleanliness conscience (long before 5S became a buzz phrase) and employees continued to pick up and clean up and didn't hesitate to ask for paint or polish to keep things spiffy. Every employee was put into a program of profit-sharing and eagerly looked for ways to make processes more efficient to contribute to the company's bottom line.

Moral of the anecdote:
The owners tightened their OWN belts, rather than force their employees to make the sacrifice. They figured they were better situated to take the hit. Modern CEOs can make a similar gesture by cutting their own pay to a symbolic "dollar" similar to what executives did during WWII when they joined the government to manage logistics and materiel for the war effort. The phrase "dollar a year man" was worn as a badge of honor by many during that period. Alas, profiteering is much more prevalent than dollar a year folks today.

 

[Jim Wynne]

If only there were more of that sort of prudence and altruism. I worked in a stamping shop in Chicago during the recession of the early 80s, and rather than lay people off entirely when things got slow (and they got very slow) the owner went down to 4-day weeks, and on the 4 days when we did work, we were cleaning, painting yellow lines on the floor--whatever it took to keep busy. One guy from the office was POed because he felt that because he was salaried, he shouldn't have to take a one-day pay cut. He was too dumb to look outside the door and see all of the people being laid off because of shortsighted bosses. When he went whining to the owner, he was offered the logical alternative, but apparently decided that 4 days' worth of pay was more attractive.

 

[ScottK]

Being very new to my current industry, I can't really comment about my job now other than the cost of brass has had us peeing our pants.

However - My last two jobs were in the fenestration business, vinyl windows and doors specifically, and I know both of those companies are hurting.
One was an extruder, one was a fabricator of customer windows and doors.
The fabricator was down to 6 hour shifts last I heard and orders have dropped way off since I left. That kind of tells me that home building is dropping in this area as most of their work was for new construction rather than replacement.

I ran into a customer service rep from the extruder a week ago and she told me that their capacity is only at about 40%. Can't really say how much of that is the fault of the economy though since I know the former CEO started his own extrusion company after a year of non-compete and stole some of their customers.

 

[Wes Bucey]

If only there were more of that sort of prudence and altruism. I worked in a stamping shop in Chicago during the recession of the early 80s, and rather than lay people off entirely when things got slow (and they got very slow) the owner went down to 4-day weeks, and on the 4 days when we did work, we were cleaning, painting yellow lines on the floor--whatever it took to keep busy. One guy from the office was POed because he felt that because he was salaried, he shouldn't have to take a one-day pay cut. He was too dumb to look outside the door and see all of the people being laid off because of shortsighted bosses. When he went whining to the owner, he was offered the logical alternative, but apparently decided that 4 days' worth of pay was more attractive.

I wonder if the owner had done business with my dad's company. The only thing the employees lost during the time of my anecdote was overtime - normally 8 hours on Saturday for a 24/5 company and about 50% of employees had been working the voluntary OT.

 

[Kevin H]

Jim - in the early 80's I was part of J & L Steels "permanent committment to increased research" as a bar product research metallurgist. When the bad times hit, I was also part of the RIF that was mostly the same people they had hired about 12 to 18 months earlier. Wish they had done something like your employer did.

I got to experience much the same situation about 7 years later in 1990 in the industrial gas industry as a field engineer. Business got slow, and the CEO decided on a 25% RIF for engineers (After all, an engineer is an engineer. An experienced one can be replaced by one right out of school with a 25% salary savings. (The CEO's thinking, not mine.)) - got caught again. Only good part of it was that the CEO got canned 6 months after the engineering RIF.

Going into a bear market would be bad with the current employer - a 2000 startup that has not made money in the startup portion of the business up to January of 2006. About 60% of our product ends up in the automotive industry, so anything affecting automotive really affects us. Not a comfortable situation, and from prior life/experience I'm sensitive to such issues.