In Businomics, I used the boat building industry as a case study for estimating an industry’s vulnerability to recession, and also for an example of an early warning system. (You can view the vulnerability study or the early warning system example.
Today the AP ran a story about boat sales being down, companies laying off workers and, in some cases, closing plants or boatyards. I’m sorry to see it, but it does vindicate what I wrote earlier: that the industry is quite vulnerable to recession, and that managers in the industry need to watch an early warning system. Two years ago I had pitched a couple of boating industry magazines an article about the industry’s sensitivity to the economy, but they weren’t interested. Oh well.
If you are not a boat-builder, let this be a lesson to follow the four steps of economic contingency planning:
- Assess your company’s vulnerability to recession
- Develop an early warning system
- Sketch out a contingency plan for a significant change in the economy
- Manage the business to preserve the flexibility to implement the contingency plan, if needed