The greatest weakness in the American economy

Updated: Apr 25

Despite what the financial pundits say, It has nothing to do with the over reliance on Asian imports, it has nothing to do with the vulnerability of the American travel industry, and thanks to the government interference, the “down” days of the DOW Jones Industrial index are looking numbered and everyone knows it.



So what was the great exposure in this whole episode? What weakness is now known to every business in the world?

The answer is simple, it is the one thing most impacted by the virus... The People.




The Small Business Impact

For small businesses, the impact has been devastating. Most small businesses are usually operating on razor thin margins to begin with, so the first casualty is almost always it’s front line employees. What was so special about this situation?


This was the first time that an all out attack was held on the very nature of small business. This is the first time the corporations and big money entities clearly didn’t have the better structure to survive either.

Let’s take for example, the age-old notion that small businesses are small, flexible and fast. What gives them that speed and ability to change direction while remaining agile is usually the fact that they have a supporting cast of people who are able to respond and move in unpredictable and innovative ways depending on the situation. Well, in this case it was unpredictability that led to the downfall for most of the small businesses. Because the one thing at risk, the one thing that needed to be protected against was another human. This so outweighed the good that companies were forced to let go of people because they could not adapt. Most businesses operate on the principle of training and recruiting the best people, but could not change fast enough in a way that did not rely on those very same people. The clear-cut advantage in this scenario is to the firms that were able to automate and take people completely out of the equation.


BIG BUSINESSES SCREAM “ VIVA LA REVOLUTION”

In many ways this was the most revolutionary moment for the human workforce since the invention of the computer. I do not want to understate this, and also I do not want to make it seem as if I’m just some rebel rouser trying to stir up trouble. No, I’m a concerned American citizen and what I saw over the last few weeks has increasingly convinced me that every other business has to be thinking along the exact same lines I am.


So what does this mean for the business world as we know it? In my opinion, My humble opinion…






I see a fast track towards automation at every level in every industry!!!








HOW WILL TECH COMPANIES

RESPOND?

If my prediction is anywhere near accurate, over the next 6 to 18 months, we’re going to see an increase in volume/ sales for companies that specialize in AI and machine learning.


Major corporations are not going to allow themselves to ever face this exact same problem again and not have a solution ready to pull off the shelf.

That simply does not work in the business world. Every failure is a learning opportunity, and this for so many companies has been a massive failure… i.e great learning opportunity.



Imagine the inability to keep a fortune 500 company up and running because everyone had to stay home. It simply does not compute for the CEO, COO or CFO that has to work the books and figure out how to explain this to the shareholders if it happens a second or third time.




Sure, the first time something like this happens most people will be understanding, but let’s look at the reality for businesses:

  1. There is no vaccine for at least the remainder of this year.

  2. The odds of another wave have not been ruled out by the world leadership.


This being said, CEOs are going to be having long, very hard discussions about what they can do to protect their organizations from situations like this ever again. It is unfortunate, but in most cases there will be a strong call towards automation on every level. Any task that can save man hours, shorten the process, or reduce communication is going to be looked at with a new found sense of urgency.


The most drastic changes are likely to come in the blue-collar sector, where tech companies are going to be rolled in to analyze processes to replace humans across a multitude of manufacturing, labor, and security jobs across the world.

There was a time where I thought a company like Knight Scope (robotic security guards) would be relegated to the fringes of investment pools for years to come before truly seeing a return on investment by their eager and early investors.

But now?

Now, the world is watching as the label essential worker is being thrown around and as the cost of keeping essential workers has started greatly impact even the most cash heavy stalwarts of the business world.


COST OF HUMANITY

When the cost of employing people (humans) is put up against the cost of long-term ownership and maintenance of robotics that have the same ability to report and in many cases do singular tasks in a predictable in measurable manner, the long-term win is going to go to the robots pretty much every time.

I see an unbelievable opportunity out there, for anyone that has the ability to take the innovation to the next level. I see the opportunity for tech companies and robotics companies to jump feet first into every market and to explore every opportunity available. From the white-collar world of finance to the blue-collar world of flipping burgers, nothing is off the table. Energy consumption and the usage of renewable energy make this an almost zero sum game in most cases when equated against the long-term unpredictable cost for maintaining human beings.



Think about it…



You don’t have to pay health insurance for a robot. Sure, you have maintenance but It’ll never get the flu, it’ll never call in sick because it’s kid is sick, and when a worldwide pandemic sweeps the world economy into a tornado of uncertainty, the one thing that the company will be able to count on is the ability of it’s robotic arm robot to flip burgers, screw in bolts, and sort various items.


Let your imagination run wild, because I guarantee you every CEO is doing the exact same thing. Amazon has already been using this sort of technology across all of its warehouses and I don’t believe that they’re going to slow down anytime soon. How long will it be before McDonald’s has a robotic arm with a spatula attached to it flip in your burgers?

How long before instead of bank tellers there’s an automated counting machine doling out dollars counting out cents in scanning your deposit checks to enter everything into your bank accounts.( Don’t we already have these? What are they called again… ATMs?)


How long before entire accounting departments are replaced by computers that take in every automated transaction from every credit card in the company database while scanning every contract and invoice to a folder that is digital and shareable for review by all government and IRS type entities? (hmmm… automated bookkeeping?). This is not as far away, as a matter of fact, its mostly already here , and this global pandemic has just made this a top priority in most CEOs minds.


I’m not saying this to scare anyone


I’m taking a realistic look and asking myself what would I be doing if I owned a company right now. Fortunately for me, I do own a company right now and I know exactly what I’m thinking I would do, if I could do things differently. I’m watching my friends who own companies think the exact same things. When they’re forced to lay off more than a third of the workforce,It gets very obvious that they’ll have to look for a different way to do business because those people might not be available to come back when this whole thing is over and done with. This is something that everyone who owns a small business is having to deal with. All the training , the time invested, the relationships built, were savagely cut by the string of fate and the need to survive. Owners are being forced to look at their workforce and make cuts that they don’t want to make for reasons they don’t want to make them.


This can be incredibly hard when you have capable people who have been trained and tested in the business environment and were generally doing a good job. But now because of no fault of their own, the company is in dire straits and cuts need to be made in order to preserve the business. This is the true meaning of falling on the sword.

This is the war on every main street that sometimes feels glossed over on the Wall Street punditry shows. I watched as the secretary of the treasury went on a spree of television shows promising “the money will be there”. But I also watched as small businesses went to the banks and were told “ we are not ready to lend out money yet”.



As I said before most small businesses are operating on razor thin margins. The layoffs have already begun and at the time of this writing 1 in 10 Americans are now out of work. I don’t know what tomorrow looks like for small businesses but I do know that many of them will not get the money they need in time to save the business.


With all this said it feels pretty natural to conclude that the future of business will continue to evolve with more automation, more utilization of robotics ,cloud computing, big data and all the other things that come with less humans.


We all know that with every great shift in technology there is an equal shift in the types of jobs that are out there and available. That means humans will still be in the workplace, they’ll just be doing something very different.


On side note :

It’s a strange and familiar feeling (2009), that we are watching a stimulus package that has been authorized by the government, change the game for every major corporation in America. For the small businesses that are saved - it changes the landscape as well.


This is not a political commentary, it's simply an example like so many others, of how drastic this disease has impacted our world. Because four years ago the vision that was laid out in most political groups was a working America, with a strong and thriving economy, that would be rewarded with baseball in the spring, football in the summer and basketball in the winter.

The world looks very, very different right now and it’s no one‘s fault, but it is absolutely everyone’s reality.


TRADER DRE

www.traderdre.com


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