At least once a day, someone asks me when I think the industry might rebound from this recession, or whether we've even hit bottom. But I figure that predicting when business conditions will improve is less important than how companies are dealing with the downturn.
Now is a good time to re-evaluate supply chains, put in place new inventory management programs, and rationalize operations. I urge restraint, however, on the last point.
Sure, there were excesses to be purged. Everyone got a little fatter during the boom time. But coming back from a collapse as severe as the one the electronics industry has endured in the past year won't be as easy as flipping on a light switch-particularly for those companies that, after repeated reorganizations, have been reduced to shells of their former selves.
With each new report of quarterly losses, I cringe at the thousands of job cuts still being made in a desperate attempt to bring costs in line with revenue. Just a year ago, EBN was reporting that a shortage of engineers and other skilled workers threatened to limit growth in the electronics industry.
I feel for the companies that for the sake of a few pennies a share must now tear down the valuable workforces that were so hard to build. I applaud those that are bold enough to endure lower gross margins or dip into cash reserves, rather than resort to the slash and burn that contributes to the feast or famine cycles in this industry.
In talking to people recently at the Microprocessor Forum, I was struck by the enthusiasm still prevalent despite the market's uncertainty. I met system architects and chip designers who, though concerned for their near-term job outlook, remain truly excited about the technology they develop.
Simplistic as it sounds, it makes sense to me to hang onto people like that.
It probably doesn't even matter if the devices being designed now ever get off the drawing board-just ask the folks who worked in the defense industry up until the mid-'80s. Keeping people employed keeps the economy humming. If that sounds like a New Deal, so be it.
I'm not suggesting companies keep engineers busy shoveling dirt or designing products never meant to be marketed. I do believe, though, that we reap what we sow.
Instead of trying to second-guess when the economy will bounce back, think about what you want your company to look like when it does.
Companies that find creative ways to reduce cost, such as decreasing salaries in lieu of reducing headcount, will be better positioned in the long run to respond to the market's eventual recovery. Those that don't risk losing market share and weakening their supply chain.
Eventually, the economy will turn around. Don't be the weakest link.
To comment, e-mail Crista Souza at email@example.com.