Downturn Management
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Final Presentation
John W.T. Cronin
Franklin Pierce University
Downturn LeadershipPractical advice for new managers
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• Goals– Learn– Share
• 2007 vs 2009 economy– Markets– Employment– Productivity
• Interview two managers– Top-level, 20+ yrs exp– Mid-level, 7 yrs exp
Introduction
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• Oct. 12, 2007– Dow Jones sets all-time
HIGH closing at 14,093
• Mar. 6, 2009– Dow Jones sets 12-year
record LOW 6,626
Stock Market
-53%
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• US Unemployment Rate– September 2007 = 4.7%– September 2009 = 9.8%
• Job Loss– Slowing, but ongoing– Hardest hit:
• Construction• Manufacturing• Retail trade• Government
Employment
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• Productivity is flat from 2007-2009
• Q2FY09 productivity is up 6.6% compared to Q1
Wages up + Output up + Hours worked down Increased efficiency
Productivity
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• Founded 1819 (190yrs)• Privately held• Paper products• 160 Employees in NH• Unionized labor• $80-85M Annual Rev.• Eco-Friendly
Company Profile
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• Helping reinvent the business
• Title: VP Supply Chain• Position: Top Management• Sector: Manufacturing• Experience: 20+ years
Chris Benincasas
“Leaders emerge during downturns. As veils are lifted on underperforming businesses people gravitate toward fresh vision.”
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• Motivation– Fear and loathing ineffective– Don’t over-staff– Ask more, give more
• Corporate interest– Churn hurts P&L– Erodes a business
Personnel
“The real capital leaves at 5PM. It’s not the plant, equipment, IP or cash….it’s the people.”
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• Defend COH/Resist RLC– Shorten Daily Sales
Outstanding “DSO”– Stretch terms with vendors– Tighten terms with customers– Don’t tie up cash in inventory
• At least 12 turns per year
• Safety, Quality, Production.
Cashflow
“Requisitions aren’t green…but they should be. Get everyone thinking about how they can conserve resources.”
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• During good times– Invest in systems– Seek out partners– Work on culture
• Size to Sales– Headcount, equipment, plant,
inventory, product lines… everything…honestly
Preparation
“Complacency is a death knell. When things are good, get people out of their comfort zones.”
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Company Profile
• Founded 1910 (99yrs)• Privately held• Military Vehicle Armor• Non-union labor• Estimated total rev: >$350M• Location annual rev: $25M
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Chris McGinnis
• CoorsTek Armor Solutions• Title: Plant Manager• Position: Mid-Management• Sector: Manufacturing• Experience: 7 years
“You’ve got to get your hands dirty. You can’t control production with emails and spreadsheets.”
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Leadership
• Supervisors set the tone• Energy and optimism
– Starts with your health– Drink the Kool-Aid
• We’re all in the same boat
“Treat people fairly and stay visible. Your people should see you working as hard as they do.”
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Efficiency
• Cross-training• Build a culture of quality• Focus on value• Move forward
“Get it right the first time. Sounds simple. It’s not. You’ve got to get to root cause on non-conforming product and fix it or it’ll reappear at the worst possible time.”
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US Bureau of Labor Statistics, OCT-2009, The Unemployment Situation – September 2009
US Bureau of Labor Statistics, SEPT-2009 Productivity and costs second quarter 2009, revised
GoogleFinance, “Dow Jones Industrial Average”, SEPT-2009 Retrieved 10-09-09 from http://www.google.com/finance?client=ob&q=INDEXDJX:DJI.
References
http://www.nrx.com/solution.php?pg=16
http://media.realscoop.com/static/upload/image/BillClintonPresident_.jpg
www.coorstek.com
www.mpm.com
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