MaxedOutMama
Sunday, February 17, 2008
Surviving A Recession, Part II
It's important to start early. Pay down debt, pull money out of your HELOC before your bank yanks it, and cut back your daily living expenses. The margin for changing jobs is a tight one. It's obviously better to bail early if you think your company is in difficulty, but you don't want to put yourself in the "last hired, first fired" bracket with a reckless job change either.
So it's terribly important to pay attention to your working environment to catch those subtle clues that your company may not be doing so well. If your company is publicly traded, you should read their quarterly and annual SEC filings, and you should periodically check Edgar to see if management and board are selling stock. But there are many other environmental clues, such as:
So it's terribly important to pay attention to your working environment to catch those subtle clues that your company may not be doing so well. If your company is publicly traded, you should read their quarterly and annual SEC filings, and you should periodically check Edgar to see if management and board are selling stock. But there are many other environmental clues, such as:
- Management all moves to a separate area which is closed off from the working peons.
- The background music at a company function seems to be "Nearer, My God, To Thee".
- Human Resources starts including helpful articles about "Understanding COBRA" and a chapter by chapter discussion of "What Color Is Your Parachute" in their monthly newsletter.
- Your company sells the building you work at and leases it back, or rents space in another building.
- Your boss starts dressing up some days, and on those days he or she takes long lunches, comes in late or leaves early.
- Consultants. Your company starts hiring consultants to deal with matters such as employee compensation and company organization. Or almost any consultants. The ratio of consultant infestation tends to vary inversely to making money. If any but technical consultants are given a long-term contract, you might as well bail ASAP. Management is desperate, hopeless, and seeking to apportion blame for the wreckage.
- The company insiders are selling stock like mad, and suddenly your raises disappear and are replaced with a merit bonus program paid in stock options.
- The stock option merit bonus program is changed to be group-rated, and somehow each working unit of the company never meets its goals, but the management groups which oversee them always do. Another variation on this is learning from the SEC filings that your company isn't making any money, but the top executives are getting large bonuses.
- That grey-headed employee in your department who has such a nice office and always goes to lunch with friends in other departments suddenly transfers to another department or leaves.
- Suddenly the IT guys start disappearing.
- Suddenly your coworkers start disappearing.
- 800 numbers used for customer service are canceled.
- The customer service department is outsourced and the company sets up a customer do-it-yourself service website.
- Collections is hiring!
- The receptionist says she's getting calls from collections people on company accounts. If you are such a fool as not to make friends with the receptionists and secretaries, seek government work. You are very unlikely to survive in the private sector.
- IPO cratered. **
- Technology company is spending more on accountants than engineers/scientists. **
Comments:
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That last point is vital.Always have a flower budget and a kind word for secretaries and receptionists.They always know what is going on and can F you or save you without saying a word.
# posted by 
: 1:28 PM
: 1:28 PM
What Anonymous said. It pays to stay friendly with those in a position to hear what is happening.
On another note, I have a simple recession meter I use: cold calls from vendors. When they start coming from machining vendors I've never heard of, worry. When they start coming from machining vendors three states away, it's a recession, regardless of what the talking heads think.
On another note, I have a simple recession meter I use: cold calls from vendors. When they start coming from machining vendors I've never heard of, worry. When they start coming from machining vendors three states away, it's a recession, regardless of what the talking heads think.
John - one of my brothers is an engineer and talks to a lot of vendors. He says he thinks the economy is going rapidly downhill.
I agree with Anon. Receptionists and secretaries are used to being treated disrespectfully, and just being decent to them is more useful than money in the bank. What goes around comes around, especially in a recession.
I agree with Anon. Receptionists and secretaries are used to being treated disrespectfully, and just being decent to them is more useful than money in the bank. What goes around comes around, especially in a recession.
To follow up on who struck john...
I sold machine work in the 80s & 90s to a large Midwestern off-highway equipment maker... I mostly supported one division but decided to branch out and call on a different division.
During one of the visits to the new group I noticed the buyer had marks on his calender... looked like gunslinger marks... I asked about them, his reply:
"Oh its an informal metric I keep... its the number of new faces calling on me - people I've never met or companies I've never heard of - I'll make a mark for you after you leave."
I was stunned... I asked "How many do you get?"
He replied, "In good times - very few... but currently I see about 250 new faces a quarter... most of the companies I've never heard of, some I've never even heard of the town they are from..."
"oh..." I said.
That was during the 1991 Bush I Recession.
I sold machine work in the 80s & 90s to a large Midwestern off-highway equipment maker... I mostly supported one division but decided to branch out and call on a different division.
During one of the visits to the new group I noticed the buyer had marks on his calender... looked like gunslinger marks... I asked about them, his reply:
"Oh its an informal metric I keep... its the number of new faces calling on me - people I've never met or companies I've never heard of - I'll make a mark for you after you leave."
I was stunned... I asked "How many do you get?"
He replied, "In good times - very few... but currently I see about 250 new faces a quarter... most of the companies I've never heard of, some I've never even heard of the town they are from..."
"oh..." I said.
That was during the 1991 Bush I Recession.
It always struck me that many corporate business surveys were conducted too high up the chain, Dryfly and John. It's the buyers and the credit managers who get the early warnings.
John, so what's your vendor index doing now?
My brother is an active engineer, but he says he hates to refuse to see the vendor reps. It got so bad he had to cut it way back because so many people were coming in.
John, so what's your vendor index doing now?
My brother is an active engineer, but he says he hates to refuse to see the vendor reps. It got so bad he had to cut it way back because so many people were coming in.
My brother is an active engineer, but he says he hates to refuse to see the vendor reps. It got so bad he had to cut it way back because so many people were coming in.
I'd like to know what business he's in... a number of segments I call on are so swamped they can't see people because they are just barely able to keep their lines running due to supply shortages. These industries are NOT related to either automotive nor building supplies however (both of them are in near depression).
In another weird twist, I was at a friends house last night and he works in advanced development for a company making hiking & work boots... most of it mfgd in Asia but not all. He was told to start planning on bringing a lot of work back from Asia due to (1) the dollar and (2) the desire on the part of the Chinese to get out of cheap US consumer based mfg.
He just came back from China and said the climate has changed precipitously - the social problems associated with the rapid industrialization is starting to take a 'political toll' on the elite & they are responding... work rules & safety violations are no longer wink wink. The result is the place isn't as cheap as it was and will be less cheap going forward.
I'll believe it when I see it but this guy is one of those boots on the ground types - I believe him more than an article in the WSJ or FT.
If true you will see price inflation *EXPLODE* here because off-shoring has pushed down domestic wages like no tomorrow. I already know factories that can't keep machine shops staffed - running with about half the workers they should have.
Keep your eyes open - it could get interesting.
I'd like to know what business he's in... a number of segments I call on are so swamped they can't see people because they are just barely able to keep their lines running due to supply shortages. These industries are NOT related to either automotive nor building supplies however (both of them are in near depression).
In another weird twist, I was at a friends house last night and he works in advanced development for a company making hiking & work boots... most of it mfgd in Asia but not all. He was told to start planning on bringing a lot of work back from Asia due to (1) the dollar and (2) the desire on the part of the Chinese to get out of cheap US consumer based mfg.
He just came back from China and said the climate has changed precipitously - the social problems associated with the rapid industrialization is starting to take a 'political toll' on the elite & they are responding... work rules & safety violations are no longer wink wink. The result is the place isn't as cheap as it was and will be less cheap going forward.
I'll believe it when I see it but this guy is one of those boots on the ground types - I believe him more than an article in the WSJ or FT.
If true you will see price inflation *EXPLODE* here because off-shoring has pushed down domestic wages like no tomorrow. I already know factories that can't keep machine shops staffed - running with about half the workers they should have.
Keep your eyes open - it could get interesting.
My informal vendor index shows we're tipping into recession, but it hasn't reached the panic stage quite yet. Lots of vendor calls but I'm not yet seeing the ones from out of state that I did in the last recession.
Re: the vendor index.
I should clarify: I work for a small capital equipment manufacturer in the western US. Engineering wears a lot of hats (including purchasing for projects) in the firm I work for. So when I say "cold calls from three states away" it's serious, because those are western states that are a few hundred miles across. If someone is looking to compete on price and eat the shipping difference on 800 miles of shipment, they're pretty desperate.
I should clarify: I work for a small capital equipment manufacturer in the western US. Engineering wears a lot of hats (including purchasing for projects) in the firm I work for. So when I say "cold calls from three states away" it's serious, because those are western states that are a few hundred miles across. If someone is looking to compete on price and eat the shipping difference on 800 miles of shipment, they're pretty desperate.
For inflation to explode, consumers must have a lot of discretionary money in pockets. They are not likely to for a while.
Not to mention, that Vietnam and other countries have been suggested as replacements for China's cheap factories.
However, both China and India will get more expensive as workers demand more of the pie, the US dollar sinks, and folks elect officials hostile to offshoring.
There will be an explosion of demand for skilled workers. But keep in mind that China used cheap labor to make cheap stuff. The US factories will use automation to make cheap stuff. The labor part will be very low.
There will be a combination of deflating discretionary incomes at the same time this stuff comes back. So expect lots of automation and not much price increases. While other third world nations wait in the wings.
Not to mention, that Vietnam and other countries have been suggested as replacements for China's cheap factories.
However, both China and India will get more expensive as workers demand more of the pie, the US dollar sinks, and folks elect officials hostile to offshoring.
There will be an explosion of demand for skilled workers. But keep in mind that China used cheap labor to make cheap stuff. The US factories will use automation to make cheap stuff. The labor part will be very low.
There will be a combination of deflating discretionary incomes at the same time this stuff comes back. So expect lots of automation and not much price increases. While other third world nations wait in the wings.
How about;
Your company pays 30 Billion dollars to much to expand into new markets, then fires the Americans who make too much and replaces them with s**t for brains Brits.
Nah. That would never happen
Your company pays 30 Billion dollars to much to expand into new markets, then fires the Americans who make too much and replaces them with s**t for brains Brits.
Nah. That would never happen
# posted by : 6:20 PM
: 6:20 PM
* IPO cratered.
* Technology company is spending more on accountants than engineers/scientists.
Ignoring business considerations, the receptionists and secretaries are fun to talk to anyway, since they don't have their brains jammed full of the same esoteric crap your colleagues do.
* Technology company is spending more on accountants than engineers/scientists.
Ignoring business considerations, the receptionists and secretaries are fun to talk to anyway, since they don't have their brains jammed full of the same esoteric crap your colleagues do.
# posted by : 7:16 PM
: 7:16 PM
I'll agree with the vendor visit stories. My group of engineers designs and builds oilfield equipment. Collectively we had about $50-60 million in buyouts. January 2nd the phones were ringing off the hooks with vendors wanting to come over. An absolute onslaught.
I could eat out for lunch every day for free for the next year, go to every Rockets, Astros and Texans game for free and I don't do any of it. Not worth the price of admission. I don't want to be friends. I want to give you money for your products and services. If you can't do that I don't care about the rest. Yeah, the vendors love me.
We're actually hiring. Given the economy I thought I would be good with a staff of 14 engineers but I was told to look for one more and if the candidates are good hire two. Entry to 5 year experience engineering jobs. Given the resumes I'm receiving there are a lot of very qualified people looking for work. There are also tremendous amounts of 2 year out of college job experienced engineers that were hired at a peak and have no clue as to what is happening around them. Reality is about to punch them in the face hard.
MC
I could eat out for lunch every day for free for the next year, go to every Rockets, Astros and Texans game for free and I don't do any of it. Not worth the price of admission. I don't want to be friends. I want to give you money for your products and services. If you can't do that I don't care about the rest. Yeah, the vendors love me.
We're actually hiring. Given the economy I thought I would be good with a staff of 14 engineers but I was told to look for one more and if the candidates are good hire two. Entry to 5 year experience engineering jobs. Given the resumes I'm receiving there are a lot of very qualified people looking for work. There are also tremendous amounts of 2 year out of college job experienced engineers that were hired at a peak and have no clue as to what is happening around them. Reality is about to punch them in the face hard.
MC
# posted by : 8:37 PM
: 8:37 PM
Dryfly - consumer electronics. One of the big companies.
MC, it does not seem to me that there is a shortage of engineers.
Not My Real Name, those are great, I'm adding them to my list.
CF, Ireland profited a lot from outsourcing. I don't know why the UK wouldn't.
MC, it does not seem to me that there is a shortage of engineers.
Not My Real Name, those are great, I'm adding them to my list.
CF, Ireland profited a lot from outsourcing. I don't know why the UK wouldn't.
Mama, excellent list. I just printed this out for my husband to read as well. He works for a big oil corporation and we are constantly keeping our eyes and ears open.
"For inflation to explode, consumers must have a lot of discretionary money in pockets"...I don't think this is necessarily true. At the time of the great inflation in Weimar Germany, people may have had a lot of money in their pockets (hundreds of millions of marks) but it wasn't discretionary money, since they were often having a hard time buying enough food to eat. Add to the money supply fast enough, you will get inflation.
Two true ones from the company I worked for in the tech bust:
They bring in a hatchet man, who among other things, gets rid of the bottled water dispensors. (He also killed our doughnut/bagel Fridays!)
They go around and check to see which employees are over 40.
One could get lucky and have a major disaster happen. That company delayed layoffs due to 9/11. I wouldn't recommend sticking it out, but severance pay can be nice to get. You might also consider taking a voluntary layoff in the first round.
They bring in a hatchet man, who among other things, gets rid of the bottled water dispensors. (He also killed our doughnut/bagel Fridays!)
They go around and check to see which employees are over 40.
One could get lucky and have a major disaster happen. That company delayed layoffs due to 9/11. I wouldn't recommend sticking it out, but severance pay can be nice to get. You might also consider taking a voluntary layoff in the first round.
"Pay down debt, pull money out of your HELOC before your bank yanks it"
How do these 2 go together? Don't HELOCs tend to be ARMs?
How do these 2 go together? Don't HELOCs tend to be ARMs?
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One other comment: We have a regional seed company out here, Territorial Seeds. I heard through the grapevine they are getting record orders this year. Somehow, I think anyone who has gardened is looking at food prices and thinking "I'd better start growing my own."
Teri - that's fascinating, and it makes sense. The price of vegetables is way, way up over a few years. Some families could save quite a bit. In flyover country a lot of families have a bit of land which can be converted to a garden.
Bob - HELOCs are almost all variable, but when interest rates are being cut, the interest rates on them will tend to decline.
It is way better to have savings in the bank to tide you over. But if you don't, and if your plan was to use a HELOC for emergencies, the unfortunate reality now is that home values are declining enough to jeopardize that line of credit.
Some people can make withdrawing the money pay for itself by using the lower interest HELOC funds to pay off higher interest debt such as credit cards. Then make the payments to your HELOC and bank the difference each month in savings.
In this environment, using credit cards for emergencies is not that viable. You don't tend to get the savings on interest.
I truly hate HELOCs for most families, because moving short-term debt onto your primary residence is a bad thing to do long term. But the reality is that a lot of people are very loaded up with debt and have to try to pay it down as cheaply as possible.
Bob - HELOCs are almost all variable, but when interest rates are being cut, the interest rates on them will tend to decline.
It is way better to have savings in the bank to tide you over. But if you don't, and if your plan was to use a HELOC for emergencies, the unfortunate reality now is that home values are declining enough to jeopardize that line of credit.
Some people can make withdrawing the money pay for itself by using the lower interest HELOC funds to pay off higher interest debt such as credit cards. Then make the payments to your HELOC and bank the difference each month in savings.
In this environment, using credit cards for emergencies is not that viable. You don't tend to get the savings on interest.
I truly hate HELOCs for most families, because moving short-term debt onto your primary residence is a bad thing to do long term. But the reality is that a lot of people are very loaded up with debt and have to try to pay it down as cheaply as possible.
FYI: Another article under a similar title was written for business owners see http://ezinearticles.com/?Seven-Steps-to-Surviving-the-Recession&id=1005608
My ex-wife and I finally decided to start our own business after 4 years of little or no work; CPA and CEC respectively. We started our own organic store and later an organic quail farm. The latter because locals are looking for high quality, low price meat for dinner.
We are East Coast and we get about 5 new vendor calls and about 10 email offers from companies we never knew existed. Many are just using contact information found on our website.
Our banks (we use at least seven) one of which just offered special business accounts with lots of Freebies, it is our biggest account so we are reluctant to pull our money out, but plan to dump the account into gold, quickly.
Problem, arose this month: Our supplier of organic feed announced it was closing its doors. We called two backups and got Voicemail only.
We are now dealing with a coop trying to get what we need.
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My ex-wife and I finally decided to start our own business after 4 years of little or no work; CPA and CEC respectively. We started our own organic store and later an organic quail farm. The latter because locals are looking for high quality, low price meat for dinner.
We are East Coast and we get about 5 new vendor calls and about 10 email offers from companies we never knew existed. Many are just using contact information found on our website.
Our banks (we use at least seven) one of which just offered special business accounts with lots of Freebies, it is our biggest account so we are reluctant to pull our money out, but plan to dump the account into gold, quickly.
Problem, arose this month: Our supplier of organic feed announced it was closing its doors. We called two backups and got Voicemail only.
We are now dealing with a coop trying to get what we need.
# posted by : 10:48 PM
: 10:48 PM << Home
