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Have to Admit It's Getting Better
August 6, 2008

'Attack of Optimism Sparks Rally' reads one headline, reflecting the 331 point boost in the Dow as oil prices fell, deflated by classic market forces--it costs too much. 'The United States Is Not Headed for Another Great Depression,' reads another analysis. The printing industry is following this sunnier view, with the latest results much improved this quarter versus a year ago. 
Some of this is artful management. Improved productivity is being delivered through better manufacturing tools (in printing and other industries) allowing workforce cutbacks and natural attrition to drive up revenue per employee. Earnings per share will rise, to the satisfaction of the investment community, as shares are repurchased and there are fewer to average the revennues across. 
Still, we have been set on an irreversible course toward improved efficiency, triggered by a range of factors--sustainability concerns, global commpetition, and tightening credit markets. This latter discipline, in fact, is the most powerful, as banks themselves are under scrutiny, and loan covenants no longer have any room for gentlemen's agreements to let things slide. When it comes time to do payroll, if there is no cash behind it, the doors close immediately.  

Posted by Bill Esler on August 6, 2008 | Comments (0)