The Spanish industry. And now that? Third (and last) part-Management in companies

First of all, just as we did in the second part of this series of posts, it is good for us to remember what we mean when we talk about industry: it is the activity that aims to transform raw materials into finished or semi-finished products, using an energy source and in many occasions through a contribution of labour.

In the two previous posts we have been clear: Spain has to face the Covid-19 black swan in a situation of greater vulnerability than other economies due not only to the imbalances in its public sector, but also to the smaller size of its companies. A pending issue that already in the last crisis of 2008, it became clear that it would have to be addressed, but was forgotten with the arrival of recovery.

To speak of what is geographically closest to me, the Eustat, which is the acronym for the Basque Institute of Statistics, has just published that the industrial activity index for April of this year is 39% lower than in the same month of 2019. The decrease occurs in all sectors, but especially in the transport material, manufacture of parts for aircraft and cars has fallen 65%. And 45% in capital goods, manufacturing of motor vehicles and aeronautics.

In addition to this, the European industry is sinking. The industry standstill has reached unprecedented levels due to the pandemic. It has gone to 12.5% ​​between February and March. To get an idea, at the worst moment of the financial crisis, this indicator fell by 4%, at the beginning of 2009, and never went deeper than that level.

All of the above indicates that in addition to the eco-financial stimulus actions that governments and the European Commission are preparing, the industry needs special treatment if we do not want this to be a real debacle. Now is the time to demonstrate the resilience of our industrial companies, their imagination and their strength.

So far, the news of a general nature, which is being transmitted in the markets and which does nothing to help the restart of the economy. Let’s go with more positive parts, those that are in our hands and over which we have complete control in most, if not all, cases.

We, the managers of these industries, get where we do. But that does not mean that we cannot do anything, nor that we have to stand idly by in the face of the current situation. Far from it, I propose a series of elements to deal with the crisis:

  1. Please, don’t paralyze. Doing nothing is the worst option. Something must be done, even at the risk of being wrong. Placing ourselves in an absurd expectation marked by an unhealthy and contagious pessimism that everything is fatal, although punctual and conjuncturally true, and that it will get worse (this does not have to be the case) makes it very difficult to move forward.

  2. Regarding the above, let us remember that this crisis is temporary. Neither is the 2008 crisis, nor is Spain the same. Three facts just to illustrate what I say:

    1. We do not have a current account deficit of Euros 100,000 million that forces us to ask other countries for that amount each year to preserve our consumption. We currently have a surplus in the current balance.

    2. The fact of not being subjected to the weight of the brick that we had in the previous crisis, can also influence in order to be able to leave in a slightly more optimistic way. We are not with a construction and real estate sector that represents 17% of Spanish GDP as it did in 2008, but we are with a very normal activity and very little dependent of it.

    3. Europe is going to help us. We still do not know how or how much the aid will be. It will be up to us to use it fully or to subsidize outdated and obsolete industrial policies. But the type of solution we are talking about is the type of solution that is being applied by all countries in Europe, including Germany.

  3. Let’s take advantage of the opportunities that every crisis hides. Einstein said: “In the midst of difficulty, lies opportunity.”

  4. Let’s have self-esteem in its right place. A crisis of uncertainty like the one that splashes us can make us question something as to whether what we do or have done we have carried out in the right way. Or if we are to blame for this happening to us. Two reflections regarding this important point:

    1. We are doing it as well or as badly as we were doing before the word COVID was heard. Therefore, we must continue to have the same confidence that we had in our performance as executives. That, at least.

    2. Get out unnecessary flogging. No one deserves a crisis like this. But it has arrived, and whether or not it stays depends on us as well. The sooner we return to the zero point, as we have said before, the better. So let’s spend time on what gives value.

  5. Let’s apply the Pareto principle. We can’t shoot on everything. You have to be selective in the 20% that affects 80% of the problems. The difficult thing is to know what that 20% is.

  6. We do not sell at any price. This is not a management crisis; therefore, it should not be destroyed with short-term policies that have dire medium-long term consequences.

  7. Let’s have a communication plan, which combines:

    1. Avoid false normality: it is not true that everything remains the same. What is happening is very serious, and it will take a lot of effort and sacrifice to get out. And you have to know it, internalize it and communicate it.

    2. Communicate hope, showing emotions. The industry is made up of people who rejoice at good news, grieve in front of bad news and worry about the future.

  8. It is time for productivity and efficiency. And on top of all, of rigorous management, by indexes that, conveniently chosen, illustrate us on the real situation of the company. Now, when we have so many restrictions on working normality, it is time to do more with the same, or at least, the same with less. Let’s review all the plans and programs of Lean Manufacturing, 5Ss, VSM, Kanban, etc.

  9. Let’s access all possible aids. All. We will shoot everything that moves, because although many, they will continue to be scarce. We are always on time to return them.

  10. Let’s be creative and resourceful. If we have been able to adapt to telecommuting or set up hospitals in record time, we can do the same with this situation. This is the country of ingenuity. Let’s prove it, for the good.

  11. Let’s be positive. We will get out of this. We must be reasonably concerned, but this crisis does not call into question what we do or have done. It is only an opportunity to reform and relocate.

  12. And finally, let’s ask for help. If we do not have the springs of managing the situation, there are many external mechanisms that can help us.

We must ask ourselves if our companies are prepared for it. If we know how to do it. And if we need help to clear the trees and to see the forest. If the answer is positive, go ahead, let’s not think about it anymore. But if not, or we have doubts, do not hesitate to ask for help. Time is money, and now more than ever.