Crisis, bloody 30%

Today I want to talk of this new alteration of the market : the Economy and Financial Crisis.

The 10Th January  I read on news papers: “Ssangyon Motor(Korean cars company) collapsed , they stops their payments due to 30% drop on sales and will reduce work forces and costs for 30%”.

On the following days I see : 2008 car sales in USA drop 30 to 40% ; GM -48,8 % , Ford -40,6% , Chrysler -55% , Toyota -34,45% , Honda -30,7%,Nissan -29,7%,Daimler AG -35,5% , Porsche -36%…

The outlook for 2009 is also pesimistic with -30% sales.

In summary I hope that this bloody number “30%” is becoming  more and more familiar in our day to day life.

We have lost in 2008 30% of our homes value , 30% or our wealth , we are 30% poorer , we will reduce our expences by 30% . We will reduce our holidays by 30% …

Your clients have lost 30% of their sales , they are planing to reduce 30% their work forces and expenses , they will drop at least 30% their buys to suppliers.

They will ask for 30% reduction in the machines price to cover a 30% reduction in investments.

The suppliers will reduce by 30% their work forces to reduce costs. The Banks are reducing 30% the credits to the companies , and asking for 30% more coverage for new credits.

This pressure will have the consequence that 30% of the suppliers of the automotive industry ( and also wash-deburr suppliers) will probably disappear in the next months.

All that will come also with a certain “nationalism” on investments to keep working the country,despite the promises to respect  the free market of the politics .

When an American company will make a new invest , the American suppliers will be in advantage against an European or Japanese supplier. When a German company will make a new investment , the German suppliers will be in advantage against the French,Italian, English or other suppliers.

When an English company will make a new investment the English suppliers will be in advantage against a German ,French,Italian …supplier (despite the second advantage of the currency with a low pound against the euro. The Sterling lost 30% against the euro in 18 months)

I remember that in the 1970’s, 1980’s and 1990’s there was also economic crisis producing a reduction in the number of wash-deburr suppliers , but they were “local crisis” focused on one or two countries . Now in this global world , where the suppliers have been pushed  to be also global , the crisis is global and the consequences will be harder.

The clients and the banks will give tough days to the suppliers companies .  Which companies will disappear? Maybe taking in consideration the way that the German Banks have been always involved in their industry and their past experiences , the German Banks will better support the local industry than in France or Italy the other Banks will do .

The reduction of work forces in the wash-deburr manufacturers directly influenced by this economic and financial crisis , and the reduction of the number of suppliers , will fire a lot of knowledge  and experience out of these companies.

The wash-deburr manufacturers work is not a mathematical or ruled work .Is based on the experience of their engineers and fitters . Its a pity to lose all that and the companies making the personnel reductions would have to protect this knowledge , and think that after any storm it comes the calm , and in two or three years if they are still  alive they will need them.

Is also important to consider that in any case the small companies can have also their opportunities against the big companies in this crisis. The flexibility , innovation , quick reaction , relations , financial wellness , and cold blood will continue to be an asset today to defeat this bloody “30%” figure.

Good luck¡