Tonight’s show on Pit Pass was good. Good interviews, especially if you’re interested in industry stuff like I am. Important note: The crew mentioned that their email has been broken and they were not aware of the problem. So they asked that any listener who has emailed the show and not received a response to please send it again.
One thing that caught my attention was a brief mention from Tony Wenck as the second hour began about the FIM MX1 World Championship being shortened (again) with the postponement of the planned USGP round. I usually check the MotocrossMX1.com site a couple of times a week, but had not heard this yet. This cancellation comes on the heels of the cancellation of the South African round due to financial difficulties.
What Tony talked about, and what I want to discuss, is the overall trend of downsizing in industry, what it means, and what we should expect. There were 40,000 layoffs in the US this week as US companies cut back. That sounds devastating, and it is if you’re one of the 40,000.
What we have to remember is that business is cyclical. Companies that are flush with cash, booming with business, and running as fast as they can — which is what many US companies were doing between 2004 and 2007 — wake up one day and realize they’ve made a mistake (or several.)
They’ve hired too many people, taken on too many new product lines, acquired too many companies, or expanded too fast. Often the easiest way to solve a problem when you’re growing is to throw more people at it. Unfortunately, this is not the most efficient way, and often far from the best way, to solve a problem. As long as things are great everyone ignores it. But when things get tight it’s time for everyone to readjust to reality.
This readjustment process is what politicians call a recession. It’s when everybody backs up, re-evaluates what’s important, what works, and what doesn’t. Ultimately, the smart companies come out better than they were. They focus on where the money comes from, and they dump, at least for a time, the arrogance that makes them think they are infallible. The market speaks very loudly in a recession. That’s good. It hurts for a while. That’s bad.
The motorcycle industry has a lot of smart, resourceful, entrepreneurial people. These people will find new markets, lean out their business, improve customer service, and find ways to grow. They won’t be swayed by scare stories on the news every night. They’ll keep working and learning and adapting.
In a year or two we’ll look back and see the industry stronger as a result of the current problems. The motorcycle is a great way to forget your problems for a while. It’s a great way to save on gas. And it’s a great hobby for families and friends. Just hang in there. It will get better.