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Sign of the times

January 17, 2009

In a sign of the times, TechCrunch provides us this handy layoff tracker  so we can keep tabs on things.  

It’s all interdependent – the unwinding of the corporate workforce that parallels the stock market and the economy.  The retrenchment, and struggle to find the bottom, the point at which the majority  believe that tomorrow will be better than today.   The return to spending, that restores the revenue flow to the next link in the chain so that they may spend in goods and services provided by others – re-investing in the cyclic flow of money.  This movement, this flow is our lifeblood.

For many industries, selling devolved to bulk discounting in order to maintain volume, as volume was seen as the answer.   Declining consumer confidence and spending (likely triggered by rising unemployment rates and endless media coverage) eroded the volume.   Reduced volumes coupled with deflated margins decimated revenue and profits, trigger expense reductions, often in the form of layoffs. 

  Ironically, these layoffs further reduce consumer confidence and purchasing, and the cycle repeats and the downward spiral accelerates, drawing more companies, more people into this vortex.   Does it all implode into chaos?   No,  history suggests that economies will retreat to a previous plataue – a bottom will be established.   The bottoming process before a true recovery can begin will likely require consolidation through mergers, acquisitions, and some liquidations.   These actions reduce the number of competitors competing for a share of the marketplace pie.   Volumes are partially restored as the size of the slices increases since their are fewer slices.   I note the volume as only partially restored, because the overall size of the pie continues to shrink as the total market demand declines.

Yesterday’s announcement that Circuit City is going the liquidation route will return share of the pie for remaining players like hhGreg, Best Buy and others.  This will effectively restore some volume to the remaining competitors even as the overall pie continues to shrink in size.    Meanwhile, those 34,000 displaced people will need to go somewhere else and it’s unlikely that the redistributed volume will create an equal number of new opportunities.

What  industries are most ripe for consolidation to restore volume and liquidity in a time of decreasing demand?

2 Comments leave one →
  1. February 24, 2009 6:13 am

    Hey–I came across your blog and layoff tracker post on WordPress. I have a layoff tracker on my site that I think you’ll like. Here’s the link…

    It injects a little humor into this bleak situation. Enjoy.

  2. February 24, 2009 2:38 pm


    Thanks – a nice bit of humor. Maybe you should enable comments so other’s could feed you some other companies and suitable quips?

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