The corporate world has been in full downsize mode for some time in order to increase the bottom line. If the stock is any gauge it appears to be a successful strategy. However, it has done nothing to boost the overall U.S. economy.
Meanwhile, in “Punching Out ”“ One Year In a Closing Auto Plant,” the painful story of downsizing is told. Paul Clemens spent a year detailing the dismantling of a Detroit auto parts plant, Budd Co., and following the equipment to its new location. Not to a metal recycling plant but to Mexico where it now sits near a Chrysler plant.
Municipalities and school systems are suddenly realizing they must downsize after years of comfortable expansion. A very difficult proposition because of the built-in costs involved in just maintaining services and paying for retirees.
A nation in downsizing mode
In many homes in the U.S. downsizing is a survival necessity. When the breadwinner in the family loses his or her job downsizing is a must. In this scenario, however, it is far more difficult. Expenses are built in and not easily subject to contraction. Many households are becoming three generational, just like the old days. Selling one”™s home can be nearly impossible. The result is too often a foreclosure.
The entire nation is in downsizing mode. Restaurants are devising menus that cost less in order to hold on to customers as others are rediscovering the joys of home cooking. Liquor stores are selling cheaper wines. Food shoppers are increasingly opting for the store brand. Many families opted for the “staycation” instead of more expensive get-a-ways. Meanwhile, the numerous shuttered retail stores are further testament to a nation in full downsizing mode.
The GDP is 70 percent consumer driven and the U.S. consumer is tapped out and therefore cannot grow the economy with a credit card.
Which road to follow?
The Energy Star website offers a useful exercise for looking at the future as we approach “the end of the oil age.” To be sure, the recession was not caused by rising energy prices but the out-of-control financial and housing sector. Whatever the cause of the recession, the way forward is going to be exceptionally bumpy.
Uncertainty in the availability of petroleum, a finite energy source, dominantly controlled by distant regimes, will begin to take hold and prices will inevitably rise. The Global Business Network devised four scenarios for the future in terms of roads to follow given what is on the horizon:
The Same Road ”“ Where the world continues much in the same direction it appears to be going in now in regard to energy and environmental concerns around climate change.
The Long Road ”“ Where the world undergoes a significant shift in the economic, geopolitical and energy centers of gravity.
The Broken Road ”“ Where the world continues much in the same direction of today, but it is then hit by a severe event that overturns established systems and rules.
The Fast Road ”“ where reasoned decisions and investments about energy and climate risk are made early enough to make a difference.
While the nation is clearly in down-size mode the administration and the corporate world continue to imagine that the economy can expand just like in the old days. Deep debts at all levels of the society assure that downsizing will continue.
Surviving the Future explores a wide range of subjects to assist businesses in adapting to a new energy age. Maureen Morgan, a transit advocate, is on the board of Federated Conservationists of Westchester. Reach her at maureenmorgan10@verizon.net.
excellent article!!