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Why this economic downturn is the best time to strengthen your business

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Why this economic downturn is the best time to strengthen your business

The latest consumer sentiment data is in, and it’s official: discretionary spending is being drastically cut as Aussies brace for more rate rises and inflation continues to bite.

Meanwhile, nearly half (46%) of businesses have reported increases in their operating costs. On top of supply chain disruptions, staff shortages and a new wave of Omicron variant, conditions are becoming increasingly challenging for businesses, with the worst possibly yet to come.

Downturns are never good news by any means, but history tells us tough times can also forge great resilience in businesses. Having survived the height of the GFC in the retail beauty industry, I can attest to the power of harnessing a start-up mindset to run a lean and agile operation that is always ready to respond to changing market conditions. 

Examples abound of robust corporate behemoths founded during severe downturns: General Motors, Burger King, CNN, Uber, and Airbnb are but a few of these. Despite the lack of easy access to financing, weak consumer demand, and strong competition, these businesses prevailed through sheer force of vision and savvy decision-making.

Like many other retail industries, the cosmetics business is competitive; only the toughest survive while the rest are culled from the pack. When times are difficult, there can be no room to make mistakes. During the GFC more than 638,000 Australian businesses shut up shop, an attrition rate of 26.4 per cent in the space of just two years. Likewise, the thousands of businesses brought to the brink during the peak of the pandemic are a stark reminder of the exacting nature of running a business.

So what do businesses need to do to ensure they emerge as victors of the downturn rather than a casualty? 

First things first, even if your online sales are strong, you should never let it make you complacent. Everyone needs a contingency plan, especially during volatile times like these. The focus should be on growing your existing client base and less on acquiring new ones – loyal customers cost the business less and are easier to retain than finding new ones. It’s 6-7 times more expensive to acquire a new customer than it is to retain an existing one, while a mere 5% increase in retention can increase revenue by 25-95%. The last thing you want is to lose customers to a cheaper competitor as they look for ways to tighten spending. 

Consider what makes your product, service or brand so unique and desirable for the consumer/businesses. The same is a race to the bottom. One simple approach we have always taken at New Laboratories is to do a 360 analysis of our client’s brand and products to assess their strengths and weaknesses and then engineer in marketable elements that consumers love and will keep coming back for. This is one of the pillars of an economically sustainable brand.

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Look at your business’ margins and think about what is costing you money that you could afford to cut back on. Survival is mostly a numbers game, and unexamined expenses can make or break your business. Get real with your cash flow and never assume past sales are a good indicator of future performance. In terms of costing and pricing, discuss the outlook of raw materials with your manufacturer and have a plan in place for inevitable price increases. Strong demand for commodities and supply chain disruptions will continue well into 2022 and must be factored in. 

If your brand is stocked in retail outlets, don’t let retailers dictate your business strategy. Ignore the noise and follow the money; conventional wisdom might dictate that discounts and sales are the way to move forward, but that isn’t necessarily the case during a downturn. Apple, Chanel and Lush never go on sale, and neither should you if it goes against your brand’s attributes. 

The secret to longevity in business is to have a strong vision of what your brand stands for. Beyond staying on top of margins and cash flow, this conviction is what will see you through. Now is the time to concentrate on the hero products that you built your reputation on. During downturns, consumers prefer to spend their hard-earned money on what is already tried and tested.

Take advantage of the time by acting quickly to build a buffer zone to insulate your business against bumps further down the road. And most of all, always look for the silver lining. Crises are great at highlighting the strengths and weaknesses of a business, and though they’re never relished, they present a great opportunity for growth and learning.

How business leaders proceed in the next few months will make all the difference between going under or establishing an enviable position of strength. 

Keep up to date with our stories on LinkedIn, Twitter, Facebook and Instagram.

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At collapsed Baltimore bridge, focus shifts to the weighty job of removing the massive structure

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At collapsed Baltimore bridge, focus shifts to the weighty job of removing the massive structure

BALTIMORE (AP) — Teams of engineers worked Saturday on the intricate process of cutting and lifting the first section of twisted steel from the collapsed Francis Scott Key Bridge, which crumpled into the Patapsco River this week after a massive cargo ship crashed into one of its supports.

Sparks could be seen flying from a section of bent and crumpled steel in the afternoon, and video released by officials in the evening showed demolition crews using a cutting torch to slice through the thick beams. The joint incident command said in a statement that the work was being done on the top of the north side of the collapsed structure.

Crews were carefully measuring and cutting the steel from the broken bridge before attaching straps so it can be lifted onto a barge and floated away, Coast Guard Rear Adm. Shannon Gilreath said.

Seven floating cranes — including a massive one capable of lifting 1,000 tons — 10 tugboats, nine barges, eight salvage vessels and five Coast Guard boats were on site in the water southeast of Baltimore.

Each movement affects what happens next and ultimately how long it will take to remove all the debris and reopen the ship channel and the blocked Port of Baltimore, Maryland Gov. Wes Moore said.

“I cannot stress enough how important today and the first movement of this bridge and of the wreckage is. This is going to be a remarkably complicated process,” Moore said.

Undeterred by the chilly morning weather, longtime Baltimore resident Randy Lichtenberg and others took cellphone photos or just quietly looked at the broken pieces of the bridge, which including its steel trusses weigh as much as 4,000 tons.

“I wouldn’t want to be in that water. It’s got to be cold. It’s a tough job,” Lichtenberg said from a spot on the river called Sparrows Point.

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The shock of waking up Tuesday morning to video of what he called an iconic part of the Baltimore skyline falling into the water has given way to sadness.

“It never hits you that quickly. It’s just unbelievable,” Lichtenberg said.

WHAT HAPPENS NEXT

One of the first goals for crews on the water is to get a smaller auxiliary ship channel open so tugboats and other small barges can move freely. Crews also want to stabilize the site so divers can resume searching for four missing workers who are presumed dead.

Two other workers were rescued from the water in the hours following the bridge collapse, and the bodies of two more were recovered from a pickup truck that fell and was submerged in the river. They had been filling potholes on the bridge and while police were able to stop vehicle traffic after the ship called in a mayday, they could not get to the construction workers, who were from Mexico, Guatemala, Honduras and El Salvador.

The crew of the cargo ship Dali, which is managed by Synergy Marine Group, remained on board with the debris from the bridge around it, and were safe and were being interviewed. They are keeping the ship running as they will be needed to get it out of the channel once more debris has been removed.

The vessel is owned by Grace Ocean Private Ltd. and was chartered by Danish shipping giant Maersk.

The collision and collapse appeared to be an accident that came after the ship lost power. Federal and state investigators are still trying to determine why.

Assuaging concern about possible pollution from the crash, Adam Ortiz, the Environmental Protection Agency’s mid-Atlantic Regional Administrator, said there was no indication in the water of active releases from the ship or materials hazardous to human health.

REBUILDING

Officials are also trying to figure out how to handle the economic impact of a closed port and the severing of a major highway link. The bridge was completed in 1977 and carried Interstate 695 around southeast Baltimore.

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Maryland transportation officials are planning to rebuild the bridge, promising to consider innovative designs or building materials to hopefully shorten a project that could take years.

President Joe Biden’s administration has approved $60 million in immediate aid and promised the federal government will pay the full cost to rebuild.

Ship traffic at the Port of Baltimore remains suspended, but the Maryland Port Administration said trucks were still being processed at marine terminals.

The loss of a road that carried 30,000 vehicles a day and the port disruption will affect not only thousands of dockworkers and commuters, but also U.S. consumers, who are likely to feel the impact of shipping delays. The port handles more cars and more farm equipment than any other U.S. facility.

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Collins reported from Columbia, South Carolina. Associated Press writers Sarah Brumfield in Washington, D.C.; Kristin M. Hall in Nashville, Tennessee; Adrian Sainz in Memphis, Tennessee; and Lisa Baumann in Bellingham, Washington, contributed.

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The Texas attorney general is investigating a key Boeing supplier and asking about diversity

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The Texas attorney general is investigating a key Boeing supplier and asking about diversity

DALLAS (AP) — The Texas attorney general has opened an investigation into a key Boeing supplier that is already facing scrutiny from federal regulators over quality of parts that it provides to the aircraft maker.

The office of Texas Attorney General Ken Paxton said it began looking into Spirit AeroSystems because of “apparent manufacturing defects” in parts that “have led to numerous concerning or dangerous incidents.”

In a statement Friday, a Spirit spokesman said, “While we do not comment on investigations, Spirit is wholly focused on providing the highest quality products to all our customers, to include the Boeing Company.”

Paxton asked the Wichita, Kansas-based supplier to turn over documents produced since the start of 2022 about communication with investors and Boeing about flaws in parts and corrective steps the company took.

The request goes into detail in seeking internal discussions around Spirit’s efforts to create a diverse workforce “and whether those commitments are unlawful or are compromising the company’s manufacturing processes.” Paxton asked for a breakdown of Spirit’s workforce by race, sexual orientation and other factors, and whether the makeup has changed over time.

Since a Spirit-made door-plug panel blew off an Alaska Airlines Boeing 737 Max in January, some conservatives have tried to link aviation safety to diversity at manufacturers.

Paxton is a conservative Republican who this week agreed to pay $271,000 in restitution to victims and take 15 hours of training in legal ethics to settle felony charges of securities fraud. Paxton did not admit wrongdoing in the 9-year-old case.

The Federal Aviation Administration launched an investigation into Boeing Spirit after the Alaska Airlines incident. An FAA audit of manufacturing procedures in Spirit’s factory gave the company failing grades in seven of 13 areas.

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Boeing is in talks to buy back Spirit, which it spun off nearly 20 years ago, as part of a plan to tighten oversight of manufacturing in its supply chain.

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Boeing plane found to have missing panel after flight from California to southern Oregon

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Boeing plane found to have missing panel after flight from California to southern Oregon

By CLAIRE RUSH and LISA BAUMANN

 

PORTLAND, Ore. (AP) — A post-flight inspection revealed a missing panel on an older Boeing 737-800 that had just arrived at its destination in southern Oregon on Friday after flying from San Francisco, officials said, the latest in a series of recent incidents involving aircraft manufactured by the company.

United Flight 433 left San Francisco at 10:20 a.m. and landed at Rogue Valley International-Medford Airport in Medford shortly before noon, according to FlightAware. The airport’s director, Amber Judd, said the plane landed safely without incident and the external panel was discovered missing during a post-flight inspection. No injuries were reported.

The airport paused operations to check the runway and airfield for debris, Judd said, and none was found.

Judd said she believed the United ground crew or pilots doing a routine inspection before the next flight were the ones who noticed the missing panel.

A United Airlines spokesperson said via email that the flight was carrying 139 passengers and six crew members, and no emergency was declared because there was no indication of the damage during the flight.

 

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The Asante Rogue Regional Medical Center is pictured in Medford, Ore., on Jan. 4, 2024. The first lawsuit filed Monday, Feb. 26, 2024, brought amid reports that a nurse at the southern Oregon hospital replaced intravenous fentanyl drips with tap water seeks up to $11.5 million on behalf of the estate of a 65-year-old man who died. (Janet Eastman/The Oregonian/The Oregonian via AP)

 

“After the aircraft was parked at the gate, it was discovered to be missing an external panel,” the United spokesperson said. “We’ll conduct a thorough examination of the plane and perform all the needed repairs before it returns to service. We’ll also conduct an investigation to better understand how this damage occurred.”

The Federal Aviation Administration also said it would investigate.

The missing panel was on the underside of the aircraft where the wing meets the body and just next to the landing gear, United said.

The plane made its first flight in April 1998 and was delivered to Continental Airlines in December of that year, according to the FAA. United Airlines has operated it since Nov. 30, 2011. It is a 737-824, part of the 737-800 series that was a precursor to the Max.

Boeing said, also via email, that it would defer comment to United about the carrier’s fleet and operations.

In January a panel that plugged a space left for an extra emergency door blew off a Boeing Max 9 jet in midair just minutes after an Alaska Airlines flight took off from Portland, leaving a gaping hole and forcing pilots to make an emergency landing. There were no serious injuries.

The door plug was eventually found in the backyard of a high school physics teacher in southwest Portland, along with other debris from the flight scattered nearby. The Department of Justice has launched a criminal investigation.

On March 6, fumes detected in the cabin of a Boeing 737-800 Alaska Airlines flight destined for Phoenix caused pilots to head back to the Portland airport.

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The Port of Portland said passengers and crew noticed the fumes and the flight landed safely. Seven people including passengers and crew requested medical evaluations, but no one was hospitalized, officials said.

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Baumann reported from Bellingham, Washington.

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