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Tuesday, 3 March 2009

Apre-ski! Global economic collapse?

No blog for a while as I have had a week in St Anton, Austria pretending I can still ski on tough slopes! Gave me time out from the day-to-day and away from the almost relentless gloomy economic and business news.

Trying to keep up with apres-ski activities is also a lost art!

Back to work yesterday and the article from Sunday papers that strikes me as the most worrying, is the Ambrose Evans-Pritchard take on global economies and currency issues.

The drop in industrial production that is being reported across the globe is of awe inspiring magnitude. Evans-Pritchard reports that:

Factory output is collapsing at the fastest pace everywhere. The figures for the most recent month available are, year-on-year: Taiwan (-43pc), Ukraine (-34pc), Japan (-30pc), Singapore (-29pc), Hungary (-23pc), Sweden (-20pc), Korea (-19pc), Turkey (-18pc), Russia (-16pc), Spain (-15pc), Poland (-15pc), Brazil (-15pc), Italy (-14pc), Germany (-12pc), France (-11pc), US (-10pc) and Britain (-9pc). Norway sails blissfully on (+4pc). What do they drink up there?

This terrifying fall has been concentrated in the last five months. The job slaughter has barely begun. Social mayhem comes with a 12-month lag. By comparison, industrial output in core-Europe fell 2.8pc in 1930, 5.1pc in 1931 and 3.9pc in 1932, according to RBS.


So in my view, unless car, OEM, industrial and other manufacturers recover near normal levels of activity in late 2009-2010 we are in for huge slides in GDP across the globe. This is linked heavily to the credit crunch of course, consumers and businesses cannot find financial products to buy new cars, printing presses, trucks, servers, machinery and so on.

More locally the impact on British companies will be very severe over the next 18 months.

Heavily indebted/ highly geared companies have gone first into insolvency in recent months, as a result of their inability to service or refinance their debt. My concern is "good" companies with more modest gearing will follow because of matters beyond their control.

At the risk of being repetitive:

If companies have growing financial problems, they should act fast, get cash under control, cut costs rapidly and deeply, examine all spending /investment plans carefully and talk to their banks. Get advice from experts in turnaround not insolvency practitioners! All good advisors will give some free time to assist you, if they won't, find one that will.

BUT, the one thing they should not do, is to stop marketing.

In my view there is no doubt that with services like Blogs, web sites, Twitter, Facebook, Google supported by your own databases that marketing has never been cheaper, or more effective if "done right".

So get marketing your business and tell as many people as you can what a great product / service / business you have!

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Many thanks for your comments. If you have a private business problem and you want advice give us a call on 0800 9700 539 or email me at keiths@companyrescue.co.uk. If you are a professional advisor with a troubled client, please suggest they visit www.companyrescue.co.uk or contact me as above.

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