One of the precepts of Sun Tzu’s Great text is that you cannot do battle with the environment.
The art of feng shui is based on living in harmony with the environment. They had rules that could keep you comfortable in a house with no insulation simply by building it in the right direction, the correct shape and having the doors face a certain direction. Long story…however the key to getting through an economic downturn has paralell logic.
When faced with a hostile environment you have two choices. Hunker down, make changes, work harder and hope for the best, or flee to a more hospitable place.
Where is the economy thriving and poised to do well for the forseeable future, and what are you doing to increase your chances of profiting in this downturn?
GardenStructure.com~Build for the Art of it! Decks Blog
Replies
The economy is thriving in China beacuse they sell us most of what we buy, and because they have no laws to protect the environment (talk about hipocracy ... wasnt Sun Tzu chinese?), and its thriving in the Middle East because they control the oil.
"Put your creed in your deed." Emerson
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
Actually Eddie-- China may be in trouble because they are so dependant on the US as a buyer for all they make... and the devaluation of the currency doesn't help them, nor does the cost of transportation increasing. It seems that inflation is a reality worldwide. Labour rates in India and Pakistan have doubled in the last year.
It is a good reason for the US economy to catch fire again though... may see some manufacturing happening here soon.
Dubai... that is one place I want to visit before I die. Remember though... oil is a limited resource. New technologies are coming... much more profitable ones long term.
I really want to try to keep this an optomistic thread though.
Calvin, I think, has been betting on this happening for many years and has built his business to weather it. Lean and Mean right Calvin?
LGardenStructure.com~Build for the Art of it! Decks Blog
Still going strong in western Canada. A combination of $100+ a barrel oil putting money in most pockets (indirectly or directly), plus weak stock market and low (and lowering) interest rates. If stocks and bonds are both uncertain choices, many eyes look to real estate as their main investment channel.
Having said that, low overheads are never a bad idea. Lean to get through the tough times, and to put profits away in good times. Do we really need that nice rented office and flashy new truck? Do they truly bring in clients that make a difference?
Lignum est bonum.
Lawrence, any more lean and it wouldn't exist.
Over the years laying the ground work for a referral only business has taken time and effort but it also insulates me from relying on an advertising based business source.
In this auto industrial area, layoffs produce countless bodies of competition in our trade. Likewise, what do the layed off new construction guys do when they're let go?
A good reputation continues to open up opportunity.
Not specializing in one facet of the industry also contributes to a more even ride.
Don't get me wrong, slow is slow. But that's a far cry from no.A Great Place for Information, Comraderie, and a Sucker Punch.
Remodeling Contractor just outside the Glass City.
http://www.quittintime.com/
Hi Calvin-- Did you know the median income in Maumee is 58k? That is a wealthy suburb.
Only 15k for poulation makes it difficult to stay local-however your real city is over 600,000 people.
True, hard hit by automotive and manufacturing woes...
I think that among the hard hit markets Calvin-- you are in one of the best ones.
Can you imagine being in a suburb of Detroit? Or Windsor?
LGardenStructure.com~Build for the Art of it! Decks Blog
"Can you imagine being in a suburb of Detroit?"I can't! Been there, done that and I'm glad that I'm gone. One of the things I like best about Austin is that I never run into anyone that is pessimistic (besides me). In Metro Detroit, it's rare that you run into anyone that is optimistic. Why? because everyone knows someone that is losing their job, worried about their job, losing their home or worried about losing their home. Keep in mind, that Detroit did not enjoy the huge runup in housing prices either. They've been battling since Clinton was in office and it's been steadily heading down. Now...back to the orginal point..err, what was it again? Bob's next test date: 12/10/07
Well put Blue-- I just knew someone had told me it was like something out of Dante's Inferno... Watching the first 48 doesn't paint a very attractive picture either.
Just wondering what areas are still thriving in North America... Most of Canada is AOK being a commodity driven economy...
Too bad you didn't settle near Houston... We just set up a Landscape Archy and she's looking for talent to do pergolas and that kind of thing. She says the economy there for high end is very strong...
Was talking to my guy in Tampa-- He says tradesmen are fleeing... House prices are down nearly 40%. Said he feels like he is swimming up stream.
Lance is booking Mid May, got a few good leads on the table as well--he is strangely comfortable. I for one would love to buy one of those half price homes in the warmth.
LGardenStructure.com~Build for the Art of it! Decks Blog
We actually have a very good deck builder in our small but growing fold of subs. I was going to give you a shout to ask some advice on the best way to keep him busy. Bob's next test date: 12/10/07
do that blue... any time.
L
GardenStructure.com~Build for the Art of it! Decks Blog
so far... our phone is busier than the last three or so years
i have got to think it has so much to do with being an established company''' there is still lot's of money being spent.. so someone is going to get the work'' it might as well be someone who looks like they will survive this downturn
my first recession was in the '70's....
my 2d was the longest.... about '87 to about '94
this one is going on it's 2d year here...
but the work keeps comming in and we have not cut our prices ( inflation is killing us with rising costs though )......
kind of a strange recession... the only thing deflating is wages..... materials are just going up.... has got to be the oil and related inflationMike Smith Rhode Island : Design / Build / Repair / Restore
That's where experience works for us Mike-- We know what to expect more or less.
LGardenStructure.com~Build for the Art of it! Decks Blog
I am glad to be in the position I'm in.
As I have been for the last 35 years.
Time marches on.A Great Place for Information, Comraderie, and a Sucker Punch.
Remodeling Contractor just outside the Glass City.
http://www.quittintime.com/
Labour rates in India and Pakistan have doubled in the last year.
Wow ... all the way up to a dollar an hour now! And still no benefits."Put your creed in your deed." Emerson
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
Eddie-- It may sound rediculous, but we are the beneficiaries of that labour savings. *they used to have an average wage of $600/month... now it is 1200.
Relatively--that is a progressive wage. A nice new car there is $2500.00
Food is accordingly cheap. Lodgings also... it is a relative thing.
When something is outsourced to Pakistan or China the numbers look like this.
5$ is the price of the product
Add 20% for transportation
Add 15% for customs and brokerage
500% markup to distributor price
Retailers typically want 20-100% markup...depending on the product.
An increase of 100% on the cost of the good overseas...may translate into a 10% cost increase to us...
They will not likely ever have benefits... it is a different world over there. It is a different culture. If you don't like the idea of having slave labor--don't buy chinese or from overseas.
LGardenStructure.com~Build for the Art of it! Decks Blog
There is no economy in China. Certainly not as we understand it."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
Your kidding right? How could there be no economy? Did everyone die there? Bob's next test date: 12/10/07
There is no 'economy' THERE because the communists run it like the feudal system from ancient history. An economy implies some form of supply and demand. The population does not get 1 cent of the US dollars their labor brings in. The Chinese government puts the US $ into its "Sovereign Fund" to reinvest in places like the U.S., while their laborers get a pittance in local vouchers. No, that is not an economy in my book."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
what are you doing to increase your chances of profiting in this downturn?
It's not so much what I'm doing now Lawrence. It's what I did prior that will help weather this already two yr downturn here to your south.
A Great Place for Information, Comraderie, and a Sucker Punch.
Remodeling Contractor just outside the Glass City.
http://www.quittintime.com/
If you live in one of the more hospitable places and provide services to those "fleeing" in your direction, you'll always be in a healthy economic position.
Similarly, if you appreciate what's likely to attract the very large and relatively wealthy generation which is just beginning to arrive at retirement age, you can be in a position to serve their wishes and reap the profits.
It's not difficult to be just slightly ahead of predictable trends. Clearly, many people who retire with some accumulated wealth will be happy to move away from cities with the aim of living more relaxed and comfortable lives in a natural environment which is more conducive to recreation and emotional/spiritual renewal.
It's the most obvious trend of which I'm aware and one which has reason to stay strong for the next twenty or more years.
I planned for this trend and for natural growth away from cities by purchasing desireable property in my younger days. I'm now in a position to sub-divide and build homes, one by one, which I'll live in for two or more years in order to qualify for the capital gains exclusion.
I'll be using only my personal observations and the common knowledge I've learned from working in the trades and from resources such as this board and many others on the Internet.
In other words, anyone can do it.
Lawrence,
I was raised by "children of the depression"-AND I started in business during a recession
so those 2 things have always colored my thinking and the way i did things.
i have always concentrated on selling neccesities( roof repairs, roof replacements)-concentrated on direct word of mouth referalls, never really been involved in new construction------and in general thought defensively.
so- i think i am positioned quite a bit like Calvin.
the only things I am doing differently this year-are due to a glut of roofing work i have on the books resulting from a hail storm 6-8-07.
Instead of re-trenching- i have actually expanded a bit in order to do more "in-house" and to use less sub-contractors.
some large jobs that I would have subbed out large portions of the unskilled work- i will do with direct employees
some portions of jobs that I would have subbed out( debris removal)- I have purchased equipment to handle-and will also do "in-house"
I suspect other contractors are paring budgets/trimming advertising expenses-but I am actually thinking of expanding my advertising budget.
Conventional business models- i think would have me investing 2.5%-4% of my sales in advertising/promotion- i have never spent that much.
almost all of my work comes from one neighborhood/customer base- I could target new advertising dollars on developing sales in another neighborhood----but I also wonder if "mining" my existing customer base more effectively might be a better investment?-working another neighborhood-would mean i lose my "home field advantage"-and I become just another contractor-no real means to differentiate myself.
But-expanding what i do within my existing customer base,allows me to capitalise on my existing reputation-but offers other risks as well.
no easy answers, huh?
Best wishes,
stephen
Steven-- Advertising is never bad...unless it is bad. Good advertising is never bad. Does that make sense? Spend wisely. Stay away from newspapers...phone books and that kind of thing.
Lean towards direct mail, something nice enough that people will keep and remember that it doesn't work instantly. Hit rates will be a fraction of what they are in the good times...but it is worth doing to stay busy. Give people something they will put on their fridge for a year or two.
I did work for the president of Amex Bank... he told me advertise even when you don't think you need it... It will serve you well.
LGardenStructure.com~Build for the Art of it! Decks Blog
Great subject!
Flee or fight.. The cost of doing either may be the same.. (long term)
Sell your main asset (your home) in a down market means taking a giant loss. plus since you flee to an area where the economy is strong you will pay a premium to move in..
Add the loss of senority, contacts, and network. and we can easily lose 1/2 or more of your net worth doing so.. Depending on your age that can be real punishment..Plus what goes up must come down. If the economy is strong now why will it remain strong for the foreseeable future?
If like Western Canada recent discoveries of oil, diamonds, and gold mean that an influx of wealth is coming for the foreseeable future. then there is little need to worry.. However if the reason is that a given area lagged behind growth trends or there remains a small level of pent up demand that will quickly extinguish itself.
Or fight, hunker down and endure. the trails and tribulations to come..
If the market is that decimated then banks will be more accomidating and willing to accept smaller payments or skipped payments. They will be eager to do work out deals. While the remaining jobs will require readjusting of your income standards.
You won't lose your network of family friends and contacts.. you won't have the losses of selling in a down market nor will you have the expense of buying in a high demand area at perhaps the tail end of that areas cycle..
Interesting on where the work is happening and where it is not. Talked to our accountant yesterday and he indicated three or four of his construction clients are folding it up this year. We maybe one of them?
Its still pretty bad here. Many guys are "fleeing" as opposed to weathering the storm.
I guess if you are settled established, able to go without a paycheck and able to ride it out, it makes sense as eventually the work will come back. Just not sure how many folks can do that?
Mike