12/22/2008 | 3 MINUTE READ

Recession Can Make Us Stronger

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 Turning Point


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 As I write this column in early December, the powers that be have just informed the nation that we are in a recession. Moreover, we’ve been in one for more than a year. Wow, what a scoop. I bet this news caught most of us by surprise (sarcasm intended).

Recessions are the economic equivalent of survival mode. To illustrate, let me first digress with a story that is used to justify beer drinking. The story’s premise is that drinking beer makes us smarter.

The lesson starts out on the plains of the African Serengeti; animals roam in large herds searching for food and water sources. A herd travels at a rate determined by its slowest members. In the back of the herd, one finds the old, injured and inexperienced that serve as a pace car for the group.

When a predator such as a lion comes across this smorgasbord on the hoof, it doesn’t go after the front of the herd. Rather, it swings in from behind to pick off the easy prey—the same old, injured and inexperienced that set the speed limit for the group.

Therefore, the argument goes, as the lions cull the herd of its slowpokes, the group is able to move faster, thereby allowing it a better chance of eluding other lions. In other words, when its less fit members are reduced, the entire group is in a better position to survive. It’s Darwinian, of course—survival of the fittest. However, it applies to human activities that don’t necessarily involve “eat or be eaten.”

Now, with the herd scenario set up, here is where the “beer makes us smarter” analogy comes in. Like the herds in Africa, our brains are made up of numerous cells—some of which are healthier than others. And like the herd, our brain’s top performance may be restricted by these underperforming members of the gray matter group.

Many cite research that seems to point out drinking beer (more than moderately) can destroy brain cells. More than moderate beer drinkers tend to justify imbibing by using the herd culling example. Like the herd, it’s the weak, underperforming brain cells that fall victim to the beverage, thereby lifting performance constraints from the better cells, which results in a smarter beer drinker. Remember, this is only a story.

I see a recession’s effects on manufacturing much like a lion attack on the herd. Recessions tend to strike hardest on the least prepared members of the manufacturing herd first. It culls the group of those companies that blithely roll along at a pace that is short of the industry’s potential.

When business is good, focus tends to be on getting work out the door. Less attention is given to efficiency because there isn’t time. When orders are good, even marginal shops can mask the realities of not making investments that will help weather the next attack.

However, when an attack comes, be it lion or recession, the herd scatters. It’s go time for the manufacturers that have prepared for bad times by lowering break-even costs and investing in the technology and techniques that will see them through. These shops quickly outpace the businesses that have been content with a slower rate, which leaves the least prepared victims vulnerable for the economic attack.

And as we’ve seen time and again, when the recession is over, it’s the healthy, nimble and prepared companies that are left standing. In addition, with the slower, plodding and unprepared shops gone from the scene, the entire industry can move even faster toward preparing for the next attack.

After the dust settles, there is less competition for business, which leaves the survivors in an even stronger position for profitability. When demand comes back, suppliers that survive are in a stronger position.

The question is, “In which part of the herd does your business find itself?” Recessions can make our precision machined parts herd stronger if we learn how to be ready for the next attack by doing what it takes to stay in front before, during and after.

The stress of recession can drive some to try to get smarter. But if the beer anology were true, I would know several of the smartest people on earth. But I do not. 