Executive Briefings

What to Do When Recovery Hits - And If It Doesn't

John Caltagirone, vice president of supply chain strategy with The Revere Group, traces some of the major challenges that companies face as they prepare - or fail to prepare - for a resurgence in economic activity and customer demand.

For companies struggling to survive, it can be difficult to look past the current economic crisis. But it's essential that corporate leaders prepare themselves for the inevitable rebound, Caltagirone says.

The first step is to examine the company's internal resources, particularly the abilities of its present workforce. Some skills might have been lost due to layoffs. Regaining them can be a major challenge.

It's equally important to look outside the organization and assess the state of its suppliers. They, too, need to be ready to ramp up production when demand surges.

Recovering from the slump won't be easy. Caltagirone cites several reasons why the current crisis might be worse than previous recessions, especially that of the early 1980s. One is the issue of oil. Twenty years ago, he says, world production was ahead of demand. "Today, we're way behind the times in terms of consumption versus demand, and countries like China and India are gobbling up the energy."

Another key difference is China's present-day position as a global player, with far more power than it had in previous downturns. The status of banks has changed as well. In the 1980s, Caltagirone says, "they were a lot smaller. There were fewer problems in getting them back up." Today, some of the biggest banks are requiring billions of dollars of bailout money in order to get back on their feet. Throw in the dire plight of the housing sector, and you have a recession that is far deeper and more serious than those of past years.

Caltagirone believes that consumer-goods producers - cosmetics, apparel, pharmaceuticals, food and beverage and the like - will be the first sector to bounce back. They'll be followed by the automotive, housing and materials manufacturing industries. Finally, capital equipment will recover, breathing new life into aerospace, shipping and construction.

Companies that prepare now for recovery "are going to be able to distance themselves from the competition," he says. "The rest are going to lose customers because they can't meet demand."

To view this video interview in its entirety, Click Here.

For companies struggling to survive, it can be difficult to look past the current economic crisis. But it's essential that corporate leaders prepare themselves for the inevitable rebound, Caltagirone says.

The first step is to examine the company's internal resources, particularly the abilities of its present workforce. Some skills might have been lost due to layoffs. Regaining them can be a major challenge.

It's equally important to look outside the organization and assess the state of its suppliers. They, too, need to be ready to ramp up production when demand surges.

Recovering from the slump won't be easy. Caltagirone cites several reasons why the current crisis might be worse than previous recessions, especially that of the early 1980s. One is the issue of oil. Twenty years ago, he says, world production was ahead of demand. "Today, we're way behind the times in terms of consumption versus demand, and countries like China and India are gobbling up the energy."

Another key difference is China's present-day position as a global player, with far more power than it had in previous downturns. The status of banks has changed as well. In the 1980s, Caltagirone says, "they were a lot smaller. There were fewer problems in getting them back up." Today, some of the biggest banks are requiring billions of dollars of bailout money in order to get back on their feet. Throw in the dire plight of the housing sector, and you have a recession that is far deeper and more serious than those of past years.

Caltagirone believes that consumer-goods producers - cosmetics, apparel, pharmaceuticals, food and beverage and the like - will be the first sector to bounce back. They'll be followed by the automotive, housing and materials manufacturing industries. Finally, capital equipment will recover, breathing new life into aerospace, shipping and construction.

Companies that prepare now for recovery "are going to be able to distance themselves from the competition," he says. "The rest are going to lose customers because they can't meet demand."

To view this video interview in its entirety, Click Here.