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Are You Caught in the Cost-Cutting Death Spiral?

Jan. 8, 2015

Have you experienced the dark, painful days of spending freezes and cost cutting? If you have spent any time in manufacturing, the answer is probably yes (My stomach hurts just thinking about how much I hated going into work during those days).

Layoffs, travel bans, no spending without mountains of paperwork, and squeezing suppliers for severe price reductions are just some of the tools used to quickly bring costs down. Good workers (those who can easily find a job somewhere else), routinely leave to avoid these gloomy times and since there is probably a hiring freeze, it is difficult to replace them.

If the company is having severe financial difficulties, then dramatic cost cutting might be understandable (There is the question of how management allowed the company to get in such bad financial shape, but that is for another day). However, there are times when the company seems to be thriving and management still plays the cost cutting card. “If we are doing so well, why do we feel so bad?” is a common thought. How does this happen?

Read more on cost-cutting on IndustryWeek.

IndustryWeek is an NED companion site within Penton's Manufacturing & Supply Chain Group.