In the past year, we have certainly seen some incredible and daunting changes come over the face of our industry, indeed, the face of the world’s economies. Through a small, recent set of personal contacts, I've become re-acquainted with some old industry friends. These contacts have been sobering, to say the least. Without exception, those who are still actively in business are operating austerely and fearfully and they are, as a group, forcefully opposed to anything more pertinent than survival. I felt the front end of this economy personally a few years ago. As a machinery seller in this industry, I was working in the Southwest. In 2006, I sold more than $2 million worth of new and used woodworking machinery. It was a very good year. The next year I barely sold enough machinery to cover my draw against commission. A very bad year!

 

When I returned from my Christmas holiday in 2008, I was told the company was retiring my position. In May, the same company closed its doors. Between January and April of last year, I sought work in an industry I had served for 40 years. I never got a serious reply to a great number of resumes and only heard a few regrets from good friends who, in other times, would have been glad to have me on board.

My story is not new or unusual, merely typical of what was evolving right before my eyes, and our eyes, and everyone else’s eyes.

I eventually found work in another industry. I sell high-performance, energy-efficient commercial light bulbs. It is not easy selling, but it is rewarding, and I have begun again to enjoy leading people from old technology to new technology and watching them react to better and more energy-efficient lighting.

In this new context, I am again calling on people from the woodworking industry. (Cabinetmakers, furniture manufacturers and the rest of the industry need better, brighter and premium performance light, too.) From time to time, I get a chance to talk with the same men and women to whom I used to sell machinery or hardware, and these conversations have led me to write this article.

In a new 'bunker' mentality

What do I mean when I say we are embracing a "bunker mentality?" The reference comes from warfare, from a place where enemies shoot at us from a distance and we dig in to the ground or the rocks and cover ourselves against the incoming fire. We do this because we do not want to die, or be destroyed.

In warfare it is the right thing to do, and in business it can be one of the right things to do. Indeed, as orders shrink, as phones become quiet, as shop and factory floors go silent, every single business expense shows itself to the owner as a current or a future or a past-due invoice; the drain and strain on any excess or reserve capital is fearful.

Cash flow is revealed to be a problem whenever there is not enough cash. Cash flow is not a problem where there is plenty of cash. We lose sight of the truth that absence of cash is not the problem; it is the evidence of other problems.

And so, as I telephone old friends to check up on their individual circumstances, I find many already "locked down and hanging on." Some are still working steadily, but with fewer people on the books to accomplish and sustain a reduced work volume. Then there are a few who tell me that they are actually "surprisingly busy."

Now that I am in my late 60s, I can say that in my business life I have worked through six of these deep economic downturns. I can also report that they have always ended, and the business cycle has always turned around, and things eventually do return to normal.

Having just missed out on living in the Great Depression (I don't know what made it great), I only have the reflected comments of my parents and grandparents to measure its impact on life "as we know it." I'm sure it was very unpleasant and difficult.

When I consider that economies have always eventually turned around, I am encouraged. I remember a post-WWII photograph of a bombed-out city in Germany (my memory says it was Berlin, but exactly which city is not important).

The photo showed a street on which no building was still standing. Everything was reduced to piles of rubble. In the center of the photo was a set-for-dinner table, at which a single, older woman was seated. Crystal and silverware had been found and the table was set, as for a fine meal. A vase stood in the center of the table, and a single rose stood proudly rising from its center.

I remember generally the photographer's caption, which read essentially: When I saw the woman sit at a "normal dinner setting" in the midst of this devastation, and I saw the peace in her countenance, I knew the world would be all right.

Get out of the bunker

Today, I want to remind everyone in the world, those who never saw this photo and those of us who did, that it is time to get up and get out of the bunker. It is time to stop bemoaning the stupidity and arrogance of the past decade. It is time to determine ways to restart the engines that drive our economy in good times and break with the bad faith of institutions that have historically served us well.

Instead of stewing in the juices of inadequacy and failure, let’s come to terms with what we each must do to make sure that corporate and personal responsibility, accountability and institutional trust replace arrogance, chicanery and deceit. It is time to leave the bunker and return to the mean streets where the struggle is joined.

It is time to formalize future plans, to set aside cults of personality, cease the one-upmanship of name-calling and mean spiritedness and return to a few time-honored principles: Meet needs with fair practices; produce goods of quality and value, supply services that improve peoples’ lives and supply the customers who still (and will always) procure the things they need. How is this accomplished? What about all the things the media says? What about 10% unemployment or upside-down mortgages, foreclosures and collapsing market values, or steep new taxes and no funds to lend. You can read the papers and listen to television’s talking heads. They will supply all the reasons you require for failure.

But, let me posit a few thoughts. In the 1950s, the United States was gripped in a similar economic malaise; people weren’t buying. Credit was not the engine of acquisition that it is today. The American auto industry — yes, those guys — came up with a catchy marketing slogan: You auto buy now!

It worked. The engine was started and the pump was primed on the incredible industrial growth that became the 1960s. What, in fact, changed was nothing more than attitude. People of that day decided to ignore dire warnings and live their lives in hope and anticipation, rather than fear and dread. The change was amazingly swift. In a few years, the economic reports were robust. Business was booming. Life was good again. Life was proven to be better outside the bunker.

Are you in or out?

What is your attitude? What can you do to uplift the attitudes of others? Can you see a single thing to do in your market that will change your outlook? Where can you invest limited funds to change your position in your marketplace? What can you do to head off the closing of your doors?

Every business owner is probably wrestling with these questions today. It is time to leave the bunker behind, to step out and join in the struggle to recreate and revitalize the marketplace in which we ply our trades.

Here are some things to do even as we wait:

• Improve performance by examining and improving your process. Address the flow of product: the placement of machinery, the component preparations. Every little or great thing about how you do what you do should be reviewed and analyzed and corrections or advances implemented. The good news is this is not capitally intensive, and you probably have the time. Get ready for the turnaround. Leave the bunker behind.

• Invest wisely. Look into precise key investments in labor-saving machines and hardware. Do it, if possible, before the turnaround, so that you are in position to respond in strength at the earliest signs of an economic uptick.

There is a wealth of used machinery available in these times. A lot of it is advanced beyond your shop as it sits now. Everything does not have to be the "state-of-the-art" if you are, in reality, only moving out of the 19th or 20th century technologies. In slow times you have the luxury of taking sufficient time to train. Your employees do not have to learn new processes or new machinery techniques under the gun of urgent demand. Take advantage of it.

• Invest your time. In soft capital markets, your company time is a resource the banks and governments cannot control. You have time to look at your business and time to see ways to take footsteps and handlings out of the process. You have time to implement things.

I call these targets "steps and touches." Their removal or elimination adds positively to your bottom line, if they do not negatively affect your finished goods quality. Collapsing a distance between points that work must move through, from reception of materials to final shipment, is a constant engagement in final profitability.

If you achieve a 5% reduction in time and effort, you will return to good times at least 10% more profitable on the same sales levels. It is time to leave the bunker and get back to thinking abut how to improve how you do what you do.

Finally, one of the great fears I hear expressed today is this: Suppose I do survive and reach the upturn, but find myself so stretched that I cannot finance the beginning obligations of turning my ship around?

This is a situation many businesses fail to anticipate. When the turnaround comes, they will need sufficient supplies and adequate staff to take in orders again. Will they have the capital to do so? What is the reserve amount one must maintain to allow their company to "get rolling" again?

My final advice is to analyze this consideration and, even if it is hard, prepare for this time to occur. Expect it to come sooner than you think. Get ready! It is time to leave the bunker.

Jon Elvrum is a former woodworking industry supplier, educator and CWB columnist who regularly advised company owners on ways they could improve their businesses. In light of the past year's economic turmoil, he returns to share his thoughts about what should be done now to prepare for better times.

 

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