4 ms·

And in a few years expect to read "Bombardier to Cut 7,500 Additional Jobs Through 2023." Such is life in a demand-limited economy, where the more companies cut

And in a few years expect to read "Bombardier to Cut 7,500 Additional Jobs Through 2023." Such is life in a demand-limited economy, where the more companies cut jobs and pay, the more their profitability and the larger economy suffers, and the more they further cut jobs.

arethuza 10y ago
I remember the team I was in at the time being told in 2008 by a senior executive of the large industrial company I was at that the prevailing management consulting view on how to survive a recession was to "cut quickly and cut deep". He then went on to explain that the management team were surprised at how quickly orders from customers were drying up. Pointing out that if everyone was cutting quickly and deeply then it's hardly surprising that demand dries up seemed a potential career limiting move so I kept quiet.
- Declanomous 10y ago
  In my experience, working at a company where independent thought is career limit is soul crushing.
  - arethuza 10y ago
    Actually it was a very good place to work - lots of extremely smart people, which is probably why I remember the apparent failure (or unwillingness) to make that inference.
    - lmm 10y ago
      Maybe they were aware of it. There's still no way a small or even large company can change the dynamics at play. Government can sometimes change things by deficit spending on infrastructure, but that's a tough sell to voters somehow.
      - abfan1127 10y ago
        because there is nothing more permanent than a temporary government solution. Also, see Econ Rap Video to understand that economy wide recessions are typically the work of government monetary policy.
      - DominikR 10y ago
        > Government can sometimes change things by deficit spending on infrastructure, but that's a tough sell to voters somehow. Because it is not free market economic activity governed by real demand. It is just government officials deciding to use other peoples money to create demand in certain sectors. If people in a community pooled their own money together to build a new bridge then you'd have economic activity that is created due to real demand and there would be a real incentive to make sure they are not overpaying or that their money is wasted. But when the government does it you end up building natural gas filling stations in Afghanistan for millions of dollars servicing a total of 3 cars running on natural gas in that country which on top of that has to be rebuilt multiple times because the Taliban bomb it again and again.
        lmm 10y ago
        > If people in a community pooled their own money together to build a new bridge then you'd have economic activity that is created due to real demand and there would be a real incentive to make sure they are not overpaying or that their money is wasted. Isn't people in a community pooling their money together what a government is? Often the increase in property values alone is more than the cost of building the bridge, the difficulty is co-ordinating them.
        DominikR 10y ago
        Ideally yes, but practically it more often than not isn't, especially if it's the federal government that decides. If governments owning and directing whole economic sectors truly was an efficient way to manage an economy then Socialism (government demand driving the economy) would've beaten Capitalism (private demand driving the economy) easily and by a long shot. It didn't just fail being more efficient than Capitalism, it even consistently ended up impoverishing and corrupting any nation that tried implementing it.
    - Declanomous 10y ago
      That's understandable. There probably isn't much they can do in that situation, it's a textbook prisoners dilemma. I'm not sure what your experience was like, but I'd rather be told the truth than lied to. I understand that the directors of a company are people too, and they want to be seen as good people. In the long run, I respect people who told me a difficult truth much more than I respect the people who made it seem as if they were forced in to a particular course of action by forces beyond their control. I suspect the willingness of upper management to explain the need for layoffs as "surprising", or beyond their control, is as much about thinking of themselves as good people. I'm sure they are fully aware they are compensated for their ability to direct the strategy of a company, and the people they are laying off generally had the least ability to change the direction of the company to prevent layoffs. If they were being fully truthful, the management structure should oftentimes be reducing their compensation first and laying themselves off. That being said, I understand how ridiculous that expectation is. I just think it's insulting to everyone involved when a company fires the people least responsible for the current predicament, and lies while doing it. I'd respect a manager more who told me it was me or them, and they made the best decision for themselves.
      - jfoutz 10y ago
        laying off 1% of the workforce every 6 months for 2 years is crushing. The good people quit, morale is wretched. layoffs hurt. Usually coworkers are likeable if not friends, and they're suddenly screwed. I don't know if it's good recession advice, but if a company has to make cuts, it's way way better do a little too much very quickly. It's weird for a month then things start getting back together. I've never worked anywhere where upper management didn't take 50% pay cuts with layoffs. (i'm sure they were restored in 6 months or whenever the business restabilized). Actually that announcement probably kept a lot of people from just leaving after the layoff.
- coredog64 10y ago
  Many industries have well defined boom-bust cycles that have little to do with consumer demand. I was at Boeing when their bust was happening during an overall economic boom, so it's even possible for that cycle to be out of sync with the greater economy.
  - DominikR 10y ago
    Did their bust occur due to insufficient demand for their products at the time? (or at least projected future demand) It would surprise me if that wasn't the case. Insufficient demand can happen for many reasons, some of them can be caused by poor decisions within the company, some of them can be caused by the overall economy.
- DominikR 10y ago
  When orders from customers are drying up then you've got to cut jobs while trying to keep the best talent, what else are you going to do? It's irrational for a corporation, not matter how large it is, to keep all it's employees hoping that it will have such a great impact on the overall economy that it will create demand again. Companies are always much weaker than global and national economic trends, they have to be reactive. If they are not they usually go out of business which is even worse than cutting some jobs.

arethuza 10y ago

I remember the team I was in at the time being told in 2008 by a senior executive of the large industrial company I was at that the prevailing management consulting view on how to survive a recession was to "cut quickly and cut deep". He then went on to explain that the management team were surprised at how quickly orders from customers were drying up. Pointing out that if everyone was cutting quickly and deeply then it's hardly surprising that demand dries up seemed a potential career limiting move so I kept quiet.

Declanomous 10y ago
In my experience, working at a company where independent thought is career limit is soul crushing.
- arethuza 10y ago
  Actually it was a very good place to work - lots of extremely smart people, which is probably why I remember the apparent failure (or unwillingness) to make that inference.
  - lmm 10y ago
    Maybe they were aware of it. There's still no way a small or even large company can change the dynamics at play. Government can sometimes change things by deficit spending on infrastructure, but that's a tough sell to voters somehow.
    - abfan1127 10y ago
      because there is nothing more permanent than a temporary government solution. Also, see Econ Rap Video to understand that economy wide recessions are typically the work of government monetary policy.
    - DominikR 10y ago
      > Government can sometimes change things by deficit spending on infrastructure, but that's a tough sell to voters somehow. Because it is not free market economic activity governed by real demand. It is just government officials deciding to use other peoples money to create demand in certain sectors. If people in a community pooled their own money together to build a new bridge then you'd have economic activity that is created due to real demand and there would be a real incentive to make sure they are not overpaying or that their money is wasted. But when the government does it you end up building natural gas filling stations in Afghanistan for millions of dollars servicing a total of 3 cars running on natural gas in that country which on top of that has to be rebuilt multiple times because the Taliban bomb it again and again.
      - lmm 10y ago
        > If people in a community pooled their own money together to build a new bridge then you'd have economic activity that is created due to real demand and there would be a real incentive to make sure they are not overpaying or that their money is wasted. Isn't people in a community pooling their money together what a government is? Often the increase in property values alone is more than the cost of building the bridge, the difficulty is co-ordinating them.
        DominikR 10y ago
        Ideally yes, but practically it more often than not isn't, especially if it's the federal government that decides. If governments owning and directing whole economic sectors truly was an efficient way to manage an economy then Socialism (government demand driving the economy) would've beaten Capitalism (private demand driving the economy) easily and by a long shot. It didn't just fail being more efficient than Capitalism, it even consistently ended up impoverishing and corrupting any nation that tried implementing it.
  - Declanomous 10y ago
    That's understandable. There probably isn't much they can do in that situation, it's a textbook prisoners dilemma. I'm not sure what your experience was like, but I'd rather be told the truth than lied to. I understand that the directors of a company are people too, and they want to be seen as good people. In the long run, I respect people who told me a difficult truth much more than I respect the people who made it seem as if they were forced in to a particular course of action by forces beyond their control. I suspect the willingness of upper management to explain the need for layoffs as "surprising", or beyond their control, is as much about thinking of themselves as good people. I'm sure they are fully aware they are compensated for their ability to direct the strategy of a company, and the people they are laying off generally had the least ability to change the direction of the company to prevent layoffs. If they were being fully truthful, the management structure should oftentimes be reducing their compensation first and laying themselves off. That being said, I understand how ridiculous that expectation is. I just think it's insulting to everyone involved when a company fires the people least responsible for the current predicament, and lies while doing it. I'd respect a manager more who told me it was me or them, and they made the best decision for themselves.
    - jfoutz 10y ago
      laying off 1% of the workforce every 6 months for 2 years is crushing. The good people quit, morale is wretched. layoffs hurt. Usually coworkers are likeable if not friends, and they're suddenly screwed. I don't know if it's good recession advice, but if a company has to make cuts, it's way way better do a little too much very quickly. It's weird for a month then things start getting back together. I've never worked anywhere where upper management didn't take 50% pay cuts with layoffs. (i'm sure they were restored in 6 months or whenever the business restabilized). Actually that announcement probably kept a lot of people from just leaving after the layoff.
coredog64 10y ago
Many industries have well defined boom-bust cycles that have little to do with consumer demand. I was at Boeing when their bust was happening during an overall economic boom, so it's even possible for that cycle to be out of sync with the greater economy.
- DominikR 10y ago
  Did their bust occur due to insufficient demand for their products at the time? (or at least projected future demand) It would surprise me if that wasn't the case. Insufficient demand can happen for many reasons, some of them can be caused by poor decisions within the company, some of them can be caused by the overall economy.
DominikR 10y ago
When orders from customers are drying up then you've got to cut jobs while trying to keep the best talent, what else are you going to do? It's irrational for a corporation, not matter how large it is, to keep all it's employees hoping that it will have such a great impact on the overall economy that it will create demand again. Companies are always much weaker than global and national economic trends, they have to be reactive. If they are not they usually go out of business which is even worse than cutting some jobs.