Positive Problems in the World of Business
April 9, 2021
Businesses are facing some “positive problems” today, such as too much demand – so how should businesses deal with these problems? Catch our newest TrendsTalk episode with ITR Economist and Speaker Lauren Saidel-Baker to learn more.
Transcript by Rev
Hi, I'm Lauren Saidel-Baker, and thank you for joining me for this episode of ITR Economics Trends Talk. I wanted to talk to you today about some positive problems in the world of business. Now, that term might sound a little bit like an oxymoron, like a known unknown, or a confirmed rumor, but it's true, there are actually good problems out there. One that many firms are experiencing right now is that of too much demand.
Now, I sincerely hope that you listened to ITR back in 2020, when we were talking about this recovery and the coming demand surge, and I hope that you have all of the capacity you need today to meet that demand. But on the off-chance you don't, you certainly aren't alone. Many firms are overwhelmed by order intake right now. It isn't just that there is a global macro economic recovery that is fueling this demand, but a lot of companies are rebuilding depleted inventories. Things that they let run down during 2020 during the recession, they're now looking to restock. So it's a double whammy in a lot of demands outlooks.
If this is something you're facing right now, what can you do about it? There are actions you can take, but before that, you really need to identify what it is you're lacking. Maybe it's machinery, some new production line or some new machine that you should have already purchased and had installed ready to go today. If that's the case, I would say, don't wait. It's certainly only going to get better. This recovery is only getting more and more robust as we proceed into 2021.
But what if it isn't that? What if it's something like materials? Maybe you're unable to source the inputs that you need to fuel your production line. Well, this is a good time to be on good terms with your suppliers. Certainly communicate with them, know when you can get the pieces you need, and make them aware of your orders as well. But it's not just the actual fulfillment, it's things like shipping right now. While demand is certainly rebounding, the global shipping capacity hasn't quite made it back up to those pre-recession levels. So there will be delays. That's not going away anytime soon. Plan for it. Expect slower shipping, especially globally, and build that into your plans for this year.
But maybe the thing you're lacking is something like labor. We have certainly been talking a lot about the very tight labor market, but I heard a great analogy from a client just the other day. He said, "I'm trying to hire someone, and the role I need to fill is for an engineer." He said trying to find an experienced engineer, an experienced hire with the skillset that he needs right now, it was akin to looking for a unicorn. He said, "I just can't find a unicorn. But what I can find is a golden retriever." That's someone who is young and friendly and eager, and really critically, someone that you can train. So you might not be able to go out and hire the unicorn, but maybe you can hire that golden retriever and turn them into a unicorn yourself.
But the next step, however you're dealing with these capacity issues, is to look ahead to the next business cycle. That's going to be critical now more than ever. You don't want to overshoot. As exciting as it is to be in a recovery phase A, or even an accelerated growth phase B trend, you don't want to overshoot your capacity and be left on the other end of this cycle with more capacity than you will need. Now, we at ITR expect the overall US industrial economy to surpass its pre-recession peak levels sometime in May 2022, but that's not going to be symmetrical across every sector in every industry. Some sectors like food production, for example, or computers and electronic spending, many of those are either already at, or will soon surpass their all time peak levels.
But other areas like auto production or mining, those just aren't going back to full strength anytime soon. In fact, those are two of the sectors that we at ITR just don't expect to reach their pre-pandemic level during the entire duration of our 12 quarter outlook. So it's important to know where you stand, where your industry stands. This is the time for company and industry specific forecasts. Be sure that you're ready, you're not overshooting, but you are engaged for some of these good problems. Because good or bad, there are very few business problems that you can't solve with a little bit of data and a little quality economic intelligence.
I'm Lauren Saidel-Baker. Thank you so much for joining me for this episode of ITR Economics Trends Talk. Let's talk more soon.