Some large enterprises have apparently decided that now is the time to take decisive action in anticipation of economic recovery. Late last week, the Wall Street Journal reported that United Airlines has asked its aircraft suppliers Boeing and Airbus to bid on a deal to provide it with up to 150 new airliners over the next few years. The move comes despite the ongoing recession — at least among developed economies. But United is reportedly anticipating a recovery. So, rather than waiting until a turnaround is in full flower, the company is seeking bids now with the expectation that lower commodity prices now and manufacturers’ hunger for orders will mean good deals.

And United isn’t the only one playing this game. Chip maker Intel a while ago announced plans for a $7 billion expansion of three plants in the United States. And Exxon Mobil has said it will increase oil exploration and production spending by 11% this year, no doubt with the expectation that an economic recovery will stimulate demand and, once again, drive up prices (something that already seems to be happening).

Such moves are certainly not without risk. True, the tide of bad economic news is slowing. But 345,000 more unemployed in the U.S. in May and a 9.4 jobless rate, plus many billions of toxic liabilities (these are not assets) remaining on banks’ books make it hard to predict when a turnaround will occur and just how rapid or robust the recovery will be.

Still, now would be a good time for manufacturers to begin to change the capital-preservation-at-all-costs, bunker mentality that has dominated over the past 18 months and position themselves for recovery. Here are a few steps to consider:

• Do some bargain hunting of your own. Deals are out there. Many suppliers are still desperate to land orders and forestall customer-base erosion. Consider starting with your software vendors. Many are publically taking the position that they are not willing to negotiate on maintenance or license charges. Behind the scenes, though, it may be a different story.
• Rethink global supply chain risks and opportunities. The recession — and slower growth in places such as China — have exposed the risks inherent in blindly outsourcing production to the lowest-cost provider on the planet. Now would be a good time to seriously evaluate the strengths and weaknesses of all of your suppliers and manufacturing services providers. And, while you’re at it, develop risk mitigation strategies for selecting new suppliers in the future.
• Position yourself to continue to benefit from the efficiency gains you’ve put in place over the past 18 months. Many manufacturers, out of necessity, have done a good job of reducing inventories and leaning out processes as demand has dried up. The best way to hang onto those efficiency gains is to improve your visibility into real customer demand so you can avoid ballooning finished-goods inventories and safety stocks once the economy and orders improve.
• Create a real workforce development plan. Many manufacturers have been forced to reduce employee headcount in order to preserve capital. In too many cases they’ve lost important experience and intellectual capital in the process. While you probably won’t be going on a hiring binge any time soon, it’s time to put together a plan for how you will replace those lost skills and retain them during the next recession.

— Jeff Moad, MA Executive Editor