The recession is over; what did we learn?

Fifteen months ago in this space, I first used the word “recession.” Many people had spent the better part of a year trying to avoid using that word. We were gearing up for a presidential election and we were trying to understand the depth of the issues we faced. Little did we know how bad it would get.

By Bob Vavra, Editor June 1, 2009

Fifteen months ago in this space, I first used the word “recession.” Many people had spent the better part of a year trying to avoid using that word. We were gearing up for a presidential election and we were trying to understand the depth of the issues we faced. Little did we know how bad it would get.

Well, I’m here to declare this month that the recession is over. OVER. It’s time to get back to the business of making things.

The business we’re getting back to, of course, is dramatically different than the one we left 15 months ago. The big question facing manufacturing right now is, did we learn anything in the last 15 months? If we did, we can go forward, wiser for the experience.

Among the lessons of the Great Recession of 2009:

• You can borrow your way into debt, but you can’t borrow your way out of debt. Businesses did it. Homeowners did it. Anyone with a shiny piece of plastic did it. There’s a difference between borrowing against your assets for expansion and borrowing because someone lets you. Banks abused our trust in the past 15 months, but easy money became the drug of choice, and it’s not fair just to blame the dealer.

• We can make what we want, but do we make what we need? The failures in the American auto industry were failures at the bottom line, but also a failure to lead the industry. The coolest ideas were coming from elsewhere, and we were always a step or two behind.

There’s plenty to be said for the excesses of corporations and unions in the price structure in the auto industry, but it wouldn’t have mattered if we had remembered that delivering a solid, affordable car that everyone wants drives increased volume and sales, and THAT is what preserves automobile jobs.

• As we cut back on jobs, did we get smarter about the ones we still have? Being in publishing and writing about manufacturing has, for the most part, been the worst of both worlds over the past 15 months. The jobs lost — and the people lost — on both sides of my life are hard to calculate. The numbers are just too big. But the issue here is that we still make things and still write about the things we make and the way we make them. What changed is the way we get that information to you.

How did your facility change in the last 15 months? Did you get Leaner, and not just leaner? Are you more energy efficient? Did you take the slowdown as an opportunity not to just cut costs, but improve operational effectiveness? Here’s the simple truth: the better manufacturers did all of the above. They cut jobs, but they also got better at the things they control inside their four walls.

• Do we have a plan moving forward? Are we going to reach across the waters and the boundaries to find new markets in which to sell our Leaner-made products? Are we going to branch out into new areas in the domestic market? I read during the recession of a number of auto suppliers who began providing products for a wider range of businesses. If they got caught by the auto slowdown this time, they worked to make sure it won’t happen again.

• How do we keep this from happening again? Besides all of the above, it’s summed up in one word: innovation. We need to inspire our people and develop our processes around innovation. The difficulty here is not the innovation itself. As hard as that might be, the harder part is inspiring the innovators to keep working hard, regardless of the things that have happened over the last 15 months.

There are still hurdles to overcome. Two major automobile manufacturers got smaller rapidly in May. Banks went through stress tests, which only seems fair after the stress they put the rest of us through. We’re seeing the leveling out of our investments and our housing prices and our job cuts, but it’s a long way up to anything which resembles where we were 15 months ago.

But things are better, and it’s time we started facing that new reality and dealing with it. We were late in understanding the mess we were in to begin with. Let’s not be late to understand that we are out of it.

The recession is over. We now return to your regularly-scheduled economy.