By 2020 there will be billions fewer consumers at their peak spending than there were in 2007.

The world of manufacturing has been good for many of us. It has provided good, medium term employment for many people and has served a great purpose. In our quest to keep up with growing demand, each of us fine tuned our businesses and took many steps to becoming as efficient and lean and mean as we can. We cut out as much manual labour as we could and we were all prepared to take on the world. But now it seems that the world has turned off it’s demand for our products.

In our quest to build a better business, we forgot about the most important element in our business, the consumer. Yes, I understand that everyone is “customer focused” and tries to relate as best as they can to the customer but that is different than the consumer. Consumers are those people with jobs and money to spend on all those great things that we make. Each and every time we eliminated a job due to improvement we killed another consumer.
Don’t get me wrong. Becoming more efficient was an essential part of the process. It is what every company in every area of manufacturing had to do just to survive up to this point. What I am saying is that each and every job that was eliminated was a consumer that was tossed away like an old diaper. We wanted nothing to do with the consumer (old employee) and we left them with nothing but the experience. As we modernized and became more efficient we eliminated our workforce with no regard for what these people were going to do. We forgot to remember that these people were also consumers. We decided that it was somebody elses problem to deal with so nobody did anything about it.
The mistake that we made is that we eliminated the majority of our workforce over the last several years and did not create new jobs for them. When we eliminate our workforce, that workforce is also the consumer base so we are basically eliminating customers every time we eliminate a job. New job creation has been at the bottom of the market with part time hours and minimum wage. With the employees that are still working, most of them are working at a much lower rate than what they previously earned and are doing much more work than what most people used to. The majority of people can barely afford to pay for the stuff they already have so they are not out spending on new stuff.

The boom is over

The baby boomers who drove the economy for years have started to retire. Many of them had their retirement savings cut to less than half when the market collapsed in 2008 so many of them cannot afford to spend like they would have. Many who planned to retire have had to extend their working lives passed their retirement dates because they can no longer afford to retire. The boomers have done their spending and it will be another 10 years before a comparable sized group does their spending.

Business as we know it is doomed…to evolution

I say that because too many people are stuck in the belief that the current system is still OK and things will magically rebound to “the good old days”. I am here to tell you that if you are hanging in there waiting for the turnaround, it’s time to give up to the reality that surrounds you. There is a major flaw in our business world that has not been addressed and until it is, things will just continue to get worse. You can see the flaw in the mantras of almost all companies. You can see the problem looking right in your face but you still cannot see it. It is all a matter of perception, what angle you look at it from.

CASH IS KING!

One of the most essential elements to any business is the consumer. Yes, this is the end customer who actually buys the finished product. These are also the people who consume the product through the entire chain. In order for everyone to have good sales, the consumers have to be buying lots of product. If the consumer stops spending money, then that means that they stop buying product and then every one in the entire chain is affected by lower volumes. Less demand = less sales.

Why has the consumer quit buying our product? Our product is a necessary part of everybody’s life so why wouldn’t they need it. The consumer quit buying the product for several reasons. The first and most obvious reason that they quit spending is because we put them out of a job. Yes, the consumer is also your employee. Each and every time that we automated and advanced our craft and removed the manual labor, we neglected to take care of the consumer and make sure they were taken care of so that they could go on spending. We we eliminated jobs and we did not create new opportunities for these people so that they could remain consumers and continue to fuel the need for product.

Why was it that we had to reduce our costs and eliminate those employees, who were also consumers?

We did not decide for ourselves that we needed to reduce costs, we were told to do so by the market. It was the customer who had to keep cutting costs to remain competitive in the market. The market is the consumer of our products that we create and the consumers decided that they want to buy the cheapest product they can regardless of the cost. When the consumer walks into a store and makes a purchase based on price, that is the signal to the producers to reduce costs. We do that by eliminating the cost of manual labor, we trim the consumer from our workforce.

It is true when we say we are our own worst enemy

It is our own purchasing habits and the concept of the cheapest price that has created our current situation. It is the disconnection that we have when it comes to price. If we picked products that supported local employment and good paying job creation we would be thinking about ourselves when we make our purchase. The corporations are only doing what has been demanded of them by the people who give them their money, the consumer and their investors (who are usually our RRSP fund managers). Every time we automate a process and eliminate an employee we kill a consumer at the same time. With each and every consumer that is eliminated it gets a little worse and so more consumers are killed off. Replacement jobs are usually taken at far less pay. Those of us who are left start feeling the pinch and start lowering our cost of living. We do so by buying cheaper stuff. The cheaper stuff they buy requires the killing off of more consumers. It’s like Russian Roulette when you make a purchase today. Which one will eliminate your job?

So when are things going to turn around and come back?

Not until we start showing leadership as companies and start to consider the health of our consumer. There is no consumer loyalty because there is no corporate loyalty to the consumer. The consumer only sees greed. Until people start getting good incomes that do more than cover their basic needs, consumer demand will continue to fall. Find a way to put income back into peoples pockets and they will start spending. It can’t be like in the past, it needs to be something new and sustainable and without greed or corruption. We can wait till the system crashes, or we can choose to start rebuilding by re-thinking how and why we do business. It is time to change…

The future is ours to create

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