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Say Good-bye To a Tough Year For Automation, by Gary Mintchell
By the last quarter of 2008, we knew we were in for something.
Automation World economics columnist Alan Beaulieu had been predicting a 2009 recession since early in 2007. By early 2009, we understood that we were in for a ride. I’m old enough to have lived through the effects of the 1973 “Arab Oil Embargo,” the recessions of the ’80s and the Dot-Com bust of 1999-2000. Without a doubt, this one is/was worse than those.
I have just returned from two technology supplier user conferences with the companies reporting year-end results as of Oct. 31 years. One was Advantech Corp. and the other Rockwell Automation Inc. Both announced Fiscal Year 2009 results that were dismal: total revenues down around 25 percent. Rockwell, though, had a very strong cash position, and each company remained profitable. Reflecting the general global trend, both salvaged profitability—and perhaps survival—at the expense of many jobs being lost. Thousands of jobs were cut by automation suppliers, many more by their customers, and even many jobs were lost at the magazines that cover the space.
On the other hand, the two companies reported that revenues for the fourth quarter of 2009 were up compared to the previous quarter. Both companies attracted large numbers of customers to their events. Companies are reporting increased quoting activity. The general economy is showing signs of shaking off sluggishness. Even the usual “doom-and-gloom” newspaper journalists who love to wallow in bad news are taking a more upbeat tone. Beaulieu predicted a mild 2010 recovery along with his 2009 recession prediction. That looks like what might be happening. We can only hope.
Our two best-read columnists are Beaulieu and industry pundit Jim Pinto. Each took a look at what has been happening and offered some advice for what to do coming out of the recession. This is not time to sigh deeply and congratulate yourself for surviving. Your competition is not standing still, so there is much work to do...
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» PINTO’S PROSE: Post-recession Planning, by Jim Pinto
After more than a year of worldwide recession, there are glimmers of growth on the horizon.
Although there’s no real consensus that the worst is over, automation companies should be developing forward-thinking strategies. Business is always cyclical, and organizations that look ahead to opportunities that follow a downturn will have a competitive advantage when the upturn arrives.
As much as during a downturn, many businesses fail on the upswing out of recession. Some may have survived by cutting back employment, outsourcing and leaning on suppliers for extended credit. When business improves, the slack in the system tightens up, and there’s often no room for growth. The walking wounded will be left behind.
Survival strategies are not success strategies. Companies that keep struggling and hoping to get back to “normal” are going to be surprised that the next normal is not like the old normal. For companies with old products selling to mature markets, the past years may have seemed like a recession. For those with new products developed for global markets, it could be a renaissance.
The paradox is that some companies risk their chance of survival and longer-term prosperity by losing people who would have been star performers in the post recession growth stage. Companies with good, trained teams have the best chance of survival, and expansion after the worst is over. Good people keep quality high, fast-moving market information up to date, and existing as well as new customers delighted. Companies that prosper in the years after a recession will be those that kept their best people during the hard times, and made sure they were trained to take advantage of new opportunities.
Expansions make it easier for everyone to look like a star, which leads poor managers to believe that somehow, everyone just got better. Those that mistake upturn success for good performance often find themselves with a lineup of C players when the next downturn arrives. The best companies are as rigorous in evaluating people during good times as bad...
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