1/27/2011 | 2 MINUTE READ

Achieving Economic Survival

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Imagine that you are running a plant.


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Imagine that you are running a plant. Things are going fairly well. You’re running at 85% capacity. Then something happens external to the plant that has a profound economic impact. Now you’re down to 50% capacity. Then there’s another blow to the economy. Capacity utilization goes to 25%. It then fluctuates to as high as 30%. And that’s as good as it gets. What do you do? Chances are, you’d hear from Corporate in short order. And they’d give you the order to close the plant. After all, such a collapse in capacity utilization is devastating to the economies of operation.
This situation is real. No, it is not based on a factory, but a hotel chain. In Israel. As Amir Hirschstein, CEO of Dan Hotels Corp. (Tel Aviv) told Dan Carrison, author of Business Under Fire: How Israeli Companies Are Succeeding in the Face of Terror—and What We Can Learn From Them (amacom Books; $24.95), “No one ever thought you could run a hotel with 25 percent to 30 percent occupancy. If you asked a CEO in an American chain if it was possible, he would think you’re crazy. But we are doing it.” They’re not doing it because they want to. But as a result of the intifada that has been occurring in Israel since 2000. Although the U.S. economy took a body blow from the September 11 attacks, imagine what it would be like if there was an on-going terrorist situation in the country, as is the case in Israel. In the cases of the companies Carrison profiles, staffs have been slashed. Imagine how confident those who remain feel of sustained employment. And that’s on top of the fact that taking public transportation to work can put one in the vicinity of a suicide bomber. Consider the productivity challenges under those conditions. Carrison writes, “I have interviewed business leaders before who have ‘turned the company around,’ to the delight of the shareholders. But, as great as their achievements had been, the miracles had been performed in a peacetime economy...[Hirschstein] had been in a protracted four-year battle; the entire economy in which he struggled had been the focus of repeated attacks on civilians. The terrorist crisis had narrowed the cooperate ‘vision’ of this prominent CEO, and of all his contemporaries, to day-by-day survival. If it could happen in Israel—a mirror of Western business mores, practices, and values—it could happen in any country, including my own.” This book is a valuable cautionary tome for managers at all levels. Although most of the examples are from service industries, the consequences of terrorism on manufacturing companies can be chillingly comparative.—GSV