Companies That Try To Save Their Way To Profitability

[ShotgunSteven]

Ever work for one, or know someone that worked for one?

A couple of years ago, a friend of mine worked for an engineering firm in the Pacific Northwest. This company employed many people that did drafting or were capable of doing it. The problem is they had only one workstation that could handle it. So at any one time there was a basically a group of people waiting around for their turn to draft some aspect of their projects. A few low-end (for the time) computers and the appropriate software would have streamlined things in a big way, but they preferred saving money by not upgrading their clunky old equipment, while at the same time bleeding money because they had lots of highly paid individuals standing around in "hurry up and wait" mode.

This same firm absolutely refused to invest in a few company cell phones. Their solution when an engineer had to go out to a job site? Give them a quarter for the pay phone. Who cares if there are no pay phones at the job site itself, obviously they thought their engineers were better off running all over the city to find a phone every time they needed to ask a question or get something confirmed.

This was before the current financial mess, when it seems those firms had all of the work they could handle and then some. In the current situation, I doubt this company will survive, if it is even still around at this point.

 

[her209]

Sounds like a dream job. Get paid lots of money to stand around.

 

[MagnusTheBrewer]

S.O.P. The vast MAJORITY of corporations would rather save a nickel today than spend a nickel to make a dime each following day. Corporations all tend to be short sighted as management compensation rarely has anything to do with company profitability.

 

[FelixDeCat]

Ive worked for 19 companies since 1982 (started when was 12). I spent 17 years at the last one. The most successful ones LONG TERM? The one you just described...frugal capital spending model and better wages / incentives. My last company paid a 20% annual salary bonus tax deferred in our 401ks. This caused the average employee tenure to be over 12 years. My boss started in 73 and her boss in 69. Still there. Founded in 1952, it was very frugal on capital spending and was run by a wise family (a bank that avoided the crises of late 80s, the RTC of the 90s, and todays housing crises).

Im not saying that keeping up with latest and greatest is a bad thing, but once you get used to doing things that way, its hard to stop. Eventually youve spent everything and think the answer is to spend more in a downturn. The opposite is true for certain companies.

Lastly, I went to Conns Appliances the other day and the salesman looked up something for me not on a wintel pc but an extremely old fashioned 80s mainframe /green screened terminal. I asked him about it and he said supposedly thats how Conns survived many downturns going on almost 120 years now.