Some Industries Will Not Recover From This Meltdown

We are not in a recession, let’s that clear. A recession implies a temporary state that will soon be over and then we will return to where we were. Dream on, it ain’t happening.

What is happening is a huge change in our economy. Many changes that are occurring will have long-term impact. We may lose our auto industry, or better said, it will exist but it will look quite a bit different than it does today. The same applies to the financial industry, the housing and building industry, and on it goes. This will be a 5-10 year cycle not returning to where we were but evolving into a different reality.

What one must understand is the same jobs will not be available on the rebound and many older experienced workers will not regain their previous position or comparable ones, ever.

Another aspect of this extreme change is that entire industries will be altered beyond recognition. The office furniture market, including new and used furniture, is in deep trouble. New office openings are rare at the moment and closings are too numerous to mention. The ongoing prognosis for business survival is very serious with millions of businesses likely to fold in the next few years and significant downsizing in many, many others that survive. There will be warehouses filled with office equipment and furniture and it will take a decade to absorb this inventory.

The furniture industry in general is experiencing severe pain. The purchase of new furniture is frequently associated with acquiring a new home and that practice has come to a standstill eliminating this bedrock demand for new furniture. Lay-offs and cuts in bonuses and pay also drive the demand for this discretionary purchase to be postponed for a while – a long while – maybe indefinitely.

Car dealerships are hemorrhaging because no one wants to buy cars. Those that do cannot get credit and so many are losing their jobs or fear they may and thus more will make do with their current automobile for at least another year or so.

Some industries, like the restaurant industry, simply slow down while others dry up completely. It’s one thing to adapt to a slow down, it’s another thing to try and adapt to a drought. Endure the slow down and redesign your business equation. Get out of a drought alive? Doubtful. If you are in an industry affected by drought you must plan your exit with broad-based exit workouts, preventing further harm. It is crucial to exit safely or reemergence becomes extremely difficult. Plan your exit, especially the cash requirements, and make certain you can bridge the gap.

We are living through a huge transition and those who recognize it will make the correct decisions. Be it adaptation, cutting and running or self-liquidation… think clearly and then plan and implement effectively.