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Eight resolutions for industrial recovery

Posted: 22 Jan 2009     Print Version  Bookmark and Share

Keywords:offshore outsourcing  investment  tax system  manufacturing strategy 

Companies need to change their way of thinking and embrace new ideas in order to survive 2009, according to Malcolm Penn, founder and chief executive with market analysis firm Future Horizons. He offers eight resolutions which he thinks companies should adopt.

"There are tough times ahead, and we need to make some big new year's resolutions, and stick to them, if they are to come out of the recession strong," he said.

1. Strengthen the role of the Chairman and non-execs to make sure long-term plans are not penalised for short-term gains.

2. Set up an investment environment that penalises the current quarterly reporting fervour in favour of an investment and corporate reporting structure that rewards long-term planning, not short-term opportunism.

3. Mandate companies report quarterly on their 1-year operational, 2 to 3-year tactical and 5-year strategic plans and force Wall Street and other financial markets to make buy/sell/hold recommendations based on the balance of these objectives, not just the next quarter's financial results.

4. Set up a tax system that discourages the stock market gambling culture by penalising profits made on short-term positions.

5. Set up a tax system that allows firms to set profits aside for a future rainy day rather than tax everything immediately.

6. By all means have bonuses but set up a system that rewards those linked to losses as well as profits such that failures and feckless risk taking carries a direct personal risk not just simply reward.

7. Set up a system that encourages counter-cyclical investment in R&D, capital expansion and new business development.

8. Set up a system that encourages a long term manufacturing strategy rather than favouring near-term offshore outsourcing.

"Only 28 per cent of people traditionally stick to their new year's resolutions," said Penn. "However, if companies want to survive this recession and even come out strongly they will need to get back to business basics—building quality products that people can afford, ergonomically designed with a positive user experience. What you can get away with in an easy-come, easy-go world is no longer acceptable in today's frugal environment. Customers will buy new products, but they want quality not tat. Let 2009 be the year of industrial design."

-Peter Clarke
EE Times Europe

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