Lessons Learned from the Last Economic Crisis

by Tim Richardson | Iter Insights

Lessons Learned from the Last Economic Crisis

Lessons learned from the last economic crisis

In 2008 one of the Iter team, Pat Salter, was the COO of an automotive tier one sequence supplier with 30 plants across Europe. His experience and the decisions he took during the last crisis are very relevant in dealing with the economic impact of coronavirus.

Although coronavirus is a different type of crisis from 2008, the deep economic impacts are similar, and the survival strategies you will have to take will also bear comparison.

To provide some background, the business had 30 plants in Europe in 2008 and faced economic and social upheaval. Many plants were the main source of employment in their local areas. Pat knew the decisions he had to take would significantly impact the local communities. He also knew he had little time to save the business.

As a Just in Time sequenced supplier they were used to fast moving situations operating 4 to 6 hour lead times, but this crisis didn’t just need responsiveness, but extraordinary thinking. As a management team they aligned quickly on the severity of the situation and the potential consequences if they didn’t act quickly or be decisive, and they knew they couldn’t rely on guidance – because it would delay action.

 Of all the things they did, these are the ones which Pat believes saved the business and are appropriate for today’s crisis:

  • Having a multidisciplinary senior team – there are so many angles you will not get them all – but a mixed team thinking out of the box enable you to get most.
  • Think of “what ifs” – even radical scenarios. You start out thinking you will get help from the Government, but they are usually too slow to save you.
  • Assess scenarios – do all the things that are shared across the scenarios and will help as soon as possible. Then focus on unique aspects of individual scenarios. There is a tendency to wait: Don’t.
  • Be very clear – be explicit in your instructions. This is not a time for “local interpretation”, get local input and respect local laws.
  • Over communicate rather than under communicate – and have a means by which all employees can provide feedback. Most will be scared and may have a lot of other considerations outside work. Part of leading from the front is being a good listening organisation.

As a result of doing all this, they rode 2008 better than their competitors. They created a survival plan and stuck to it, making some harsh decisions early on which in the longer term were appreciated by the team. This included costs savings with redundancies and a focus upon their suppliers and customers.

The upshot was, they managed to stay in profit and returned to full profitability relatively quickly.
Pat would do all the above to deal with the current crisis, but to safeguard people’s health he also advises:

  • Running smaller teams, isolate individuals within the factories
  • Fully utilising visual production management
  • Running three separate shifts with operations spread out
  • Considering community and caring in all actions and communications as this will be appreciated

Tim Richardson
Development Director

Iter Consulting