Be Careful!

By Jim Schaffer

March 2007

The key business indicators in our industry document a slowdown, but don't overreact!

Yes, we've seen housing starts decrease measurably for the first time in three years, and yes, comp store sales have been anemic or negative at the big box retailers. However, this is not the time to slash employment ranks to improve the bottom line. While this strategy might seem attractive for the short term and while there has been little or no job growth in manufacturing, construction or retail positions, overall employment statistics document that our nation is continuing to move toward a full employment economy. The unemployment rate dropped again last month to 4.5, while the futurists are still warning us that the economy will run almost 10 million skilled workers short of civilian employment demands by the end of the decade.

 

So, be careful. From what we have seen in the employment economy, there is reason for caution on several fronts. First, despite the current downturn in business, you need to do everything you can to attract and retain top performers. In the battle for market share, there will be a greater focus than normal on recruiting top producers in all areas of expertise, and the competition will be fierce. Furthermore, should you lose a top player or be tempted to lay one off during the downturn, it will likely be much more difficult (and costly) to replace them than ever before. 

Second, you need to beware of individuals who may already be on the market as a result of downsizing or whatever it is being called this time around. While a number of them may be legitimate victims of the short-term focus noted above, some of them have been factually displaced for legitimate performance issues.  We even had one employer tell us candidly that they were using the downturn in housing starts as an excuse to "clean house" of those employees who may have been problems to them in the past. So, be cautious!  If you are diligent in your recruiting and hiring programs, you won't get burned.

 

Finally, from our perspective, this is the time to gain market share.  As Nation's Building News projected on March 12, housing starts will likely increase from their current level of 1.408 million to 1.525 million by the end of the year and return to the 1.7 million level by next year.  And, as more people return to gainful employment, expendable income will increase as will sales at the industry's key retailers.  In summary, the market will be back before you know it.  Don't take apart the infrastructure that took you years to build.