Tests of Time: Managing Your Fleets and Operations in a Recession Is Nothing New

LCT Staff
Posted on August 1, 2008

No matter how big the boom, an economy eventually will head into a recession or at least a slowdown. When the U.S. hit economic turbulence in 1990-91, when GDP contracted for two consecutive quarters and the Persian Gulf War loomed. While technically not in a recession, the economy now should be compared more to the recessionary trends of 1990 than 2001. The economic pain in 1990 was more structural, and the recovery took longer.

As a business media buff, I recently came across a Nov. 5, 1990 article from Fortune magazine titled, “How to Manage in a Recession.” I first thought an 18-year-old article would be useless, but after combing through it, I realized certain time-tested pointers on how to run your business during a recession still apply today. I want to share some of those points with you, not only to help your operations endure and thrive, but to remind you that as the saying goes, “This too, shall pass.”

According to the article, written by a Fortune magazine reporter: “Many U.S. companies already are running lean, so for them, the obvious money-saving anodynes such as massive layoffs and reduced travel are not an option. Instead, companies will have to be more ingenious, devising new techniques to squeeze out money at the margins, and maybe even radically redesigning the way people go about their work. The effort may entail innovative arrangements with labor, novel administrative systems, or yet further investment in technology.”

1) Market amid the mayhem. One of the most important “ingenuities” the article mentions pertains to marketing. Do not cut back on your marketing, advertising, and public relations. You should actually spend the same or more, and keep your profile and brand out there as many of your competitors invariably will fall into the cutback trap. Do not treat marketing as an expendable “soft expense.”

2) Service with a smile and much more. The article continues: “Most CEOs, consultants, and business professors agree, that preparing for a recession is more a matter of making adjustments in how you do things than of making major shifts in your strategy. If you’re a low-cost service provider, get your costs down even more. If you’re a customer-driven company, provide better service than ever.

Redouble efforts on all of those up-to-date management tactics that should be second nature by now — total quality, self-managed teams, just-in-time, and speed.” The ingenuity of “providing better service” must be your strong suit as a chauffeured transportation operator. Better service will stand out and may be a deciding factor for clients who are weighing where and what to cut. If you are top-notch, you likely will be perceived as indispensable. Keeping up demand for your services is crucial.

3) Get aggressive and act counter-intuitive. The article states, “Admittedly, to boost spending in a recession requires a killer instinct. Says Edward Lawler III, a professor of management at the University of Southern California: ‘‘If you’re strong, look at recession as an opportunity to deliver the death blow to some marginal players.’ In going on offense, one of the most potent weapons in a recession can be advertising. That’s in part because historically most managers have considered cutbacks in advertising the easiest and quickest way to reduce costs in a downturn.”

4) Change your message. According to Fortune: “When faced with consumers who make Ebenezer Scrooge look like Mother Teresa, it helps to shift your ad campaign from messages such as luxury and status-enhancement to efficiency and value. . . After fine-tuning advertising and marketing, the most important thing you can do in a recession — and one of the most counterintuitive — is to fire off a broadside of new services and/or amenities.”

I like to come back to some of my favorite concepts: eco-commuting, limo-pooling, and marketing to stressed-out families traveling to and from at airports. You have vehicles that can be pitched to these potential clients, many of whom are looking for affordable, practical conveniences. And as gas rises toward the unthinkable $5 per gallon benchmark, chauffeured transportation for two or more passengers can be a lifeline. But you’ve GOT TO GO OUT AND TELL everyone first.

5) Fire as a last resort. In 1990, Corning managed to streamline payroll without massive layoffs. According to the article, Corning “signed an unusual agreement with the union at its Blacksburg, Va., plant. The deal: When times get tough, outside contractors will go first. Idle Corning workers will clean the factory, manicure the grounds, and paint the halls. If the slump gets deeper, the company will move to shorter hours, then shorter workweeks, and finally, only if absolutely necessary, workers will be laid off.”

Your chauffeurs, dispatchers, reservationists, and marketers are your most valuable assets; they’re all human. Keep them as long as you reasonably can. Teach everyone to hunker down and multi-task even more, since many of your employees do that already. Remember: It’s cheaper to fire, and costlier to hire.

Finally, history shows that the recessions of 1982, 1990, and 2001 each differed from the other. And each was followed by a unique economic boom. 2008 is no different. Entrepreneurial energy, ingenuity, and panache always win out in the end.

LCT Staff LCT Staff
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