The year 2014 has been a big pain for all the heavy equipment manufacturing companies. They were all left complaining about slow growth rate and decline in the sales volume. Due to unrest in the Middle East and other parts of the globe, customers were reluctant to make further purchases. Another reason that adds to the misery is delay in starting a project. Due to many reasons, projects are unable to take off and that results in decline in the demand for heavy equipment. Therefore, it also does not make any sense to produce innovative machine as it makes no difference in a stagnant market. Like all other companies, Hyundai is also going through the same rough phase and is struggling hard to come out of it. The think tankers are working hard to find a solution to this issue and are also waiting for the market to correct. If the issues in the Middle East are put to rest, then things might start catching speed from there. However, that is just a matter of some time and needs patience. It is therefore important for companies to find an alternative and check other potential markets rather than simply sticking to countries that are of not much importance for the time being.
Having said that, it does not imply that construction equipment manufacturing companies should simply wind up their businesses from such countries. They can reduce their labor force and ensure that they do not end up spending their capital in units that may not yield much to them. If we check the last few years’ performance of Hyundai, we find that there has been a consistent fall in their sales volume. It is simply not picking up. In this way, they are only lowering their performance bar and are expecting that it will get to see some green pasture sooner.
Hyundai is in no mood to continue with its sick units or the units that are not performing. The year 2015 will be the year of corrections for them. They have to identify the units that is not performing and then also need to check the possibility of it remaining in that condition for the next few months. If they are convinced that there are no signs of revival, then it will be prudent to close such units and save the company from incurring further financial loses. The next thing that they can do is lay off few employees from units that are performing but not as per the company’s projections. It makes no sense to have a workforce that is not delivering. Other than this, they can also move their back office staff to sales department or can cross train them to perform duties at various levels.
Cross training people will keep the resources intact and will also enable them to perform various duties at different situations. By following few simple things can bring them back in business. However, for the time being the ground situation is grim and it will bounce back only if corrective actions are taken.