Top Execs Share Their (Sad) Thoughts On The Economy
December 6, 2008 Leave a comment
BusinessWeek interviewed eight corporate execs about the their thoughts on the economy. It’s really interesting to hear their perspectives. Here are excerpts from their comments:
- FRED SMITH, FedEx: It is by far the worst I’ve seen in the 35 years I’ve been in business… The only good thing is that if anything turns this around, it’ll be pretty quick, since inventories are at such incredibly low levels. But I’d be very surprised if anything started to turn around before the middle of next year.
- ROBERT NARDELLI, Chrysler: …our 6.5% unemployment rate… could go to 10%-plus. Even with aggressive resizing, we can’t keep up with it because we haven’t seen the bottom.
- RALPH DE LA TORRE, Caritas Christi Health Care: We live and die on the tax-free bond market, and right now we’re dying… I think there’s going to be a pretty substantial consolidation in health care. As many as 20% of hospitals could close. There’s going to be no capital spending for at least the next year or two.
- MILES WHITE, Abbott Laboratories: If you’re on a drug that’s reasonably discretionary, you might cut back as a patient. But if you’re on a drug for a chronic problem, you’re not cutting back… I wouldn’t call [our situation] severe.
- LEWIS HAY, FPL Group: Probably 25% of our customers are past due. Normally, it’s more like 15%… With such a shortage of access to capital, how are we going to get all these alternative energy projects going?
- DENNIS DAMMERMAN, former GE vice-chairman: And while I don’t agree with much of what Barack Obama wants to do, I think that for a great chunk of our consuming public, he has improved that confidence. I hope this enthusiasm doesn’t die.
- TIMOTHY MANGANELLO, BorgWarner: We’re preparing for nothing good until mid-2010… it’s possible it won’t improve by then… the cost structure in the U.S. has to improve. Health-care costs are too high. Tort reform is too difficult. And business taxes are too high.
- FRED HASSAN, Schering-Plough: The key is inflation. If inflation stays under control and confidence returns, we’ll come back early. If inflation starts to roar in mid-2009 and thereafter, we have a problem. It might start to look like the mid-1970s.
My take: Overall, this doesn’t sound too encouraging for 2009. The only positive notes are that inventories are already pretty low and that President-Elect Obama may be able to bolster consumer confidence.
I’m hopeful that Obama will remain as inspirational and as non-partisan as he appeared to be during his acceptance speech. I’ve also posted a couple of pieces of advice to the new administration: Appoint a Citizen Experience Officer and Revive “Brand USA.”
For senior executives, I think the basic decision remains: Are you going to manage your way through the recession or lead your company out of it?
The bottom line: I’ll keep offering advice on how to manage in a recession.