Say it ain't so, Tastykake!

If you grew up in the Philadelphia metropolitan area, it is likely that Tastykake was a treasured part of your childhood. In my pre-weight-loss era of life, Krimpets alone just about made up one of my Food Groups. I still enjoy their sugar-free options. So, it is with sorrow that I read that Tastykake is considering selling out in the face of growing challenges in their financial situation.

Tasty Baking Co. president and chief executive Charles Pizzi said in a statement that "unanticipated operational challenges" related to its new bakery in Philadelphia's Navy Yard had lowered projected savings for the fourth quarter of 2010 by $3 million to $10 million.

The company's shares plunged more than any other on the Nasdaq, giving up 37 percent of their value and hitting a 52–week low of $3.83 before closing at $4.05.
The company cited a bankruptcy filing by the owner of the A&P, Super Fresh and Pathmark grocery chains and rising commodity costs as contributing factors to the financial squeeze and said it was looking at all options.

I truly hope Tastykake can pull out of the death spiral and be restored to its former glory. Otherwise, I hope any would-be buyer would keep around the old brand in some form, instead of just adding any signature offerings to their own line-up.

The Employed Aren't Happy Either

There has been lots of talk about the perils of unemployment in the Great Recession, and they are certainly not to be underestimated. But it turns out staying employed in the Recession can be perilous, too.

The Labor Department reported Tuesday that worker productivity fell 0.9% in the second quarter. That's the first decline in eighteen months and may be a sign that employees have finally gotten to the point where they are simply stretched too thin.

The amount of hours worked rose at a faster pace in the month than actual economic output. That means that companies may no longer be able to rely on cutting costs, particularly through layoffs, to juice profits...

"What's happened is a lot of U.S. companies have reached the limit of how much they can slash their workforce and work existing employees to the bone," said Nariman Behravesh, chief economist with IHS Global Insight in Lexington, Mass. "At some point, even weak spending growth will require businesses to hire more people to meet the demand."

In other words, employees are doing the jobs that used to be done by many more people. We have all made heroic efforts to keep things moving, but now we're simply burning out.

Independence Day Fireworks punted by the Great Recession

As the Great Recession drags on and on, more and more municipalities are being caught by the cash crunch. This year, a major casualty of shrinking budgets may be the traditional July 4th fireworks celebration. Towns all over are canceling or getting creative.

"It's becoming harder and harder to justify," she says of the $20,000 event. "The tax dollars only go so far, and it's one of those expendable items."

Other places such as Birmingham, Ala., may scale back the festivities as well unless they can attract more corporate sponsors. The Independence Day celebration in Moorestown, N.J., across the Delaware from Philadelphia, was canceled for the second year in a row. Monterey, Calif., suspended its Fourth of July festivities because of "budget constraints and ongoing safety concerns regarding the Fireworks Display," according to the city's website. Maplewood, Minn., Mayor Will Rossbach told the Pioneer-Press that it no longer made sense to pay about $19,000 for the town's 30-minute fireworks display while struggling to maintain more basic city services.

In another strategy, Morris Plains, N.J., saved its traditional July 4th fireworks display -- and some of its tight budget -- this year by holding it on Saturday, June 26, instead.

The Great Recession hits Teens

It has been a long, hard couple of years for everyone. Layoffs, overtime, fruitless job searching, and unemployment payments. Unsurprisingly, the Great Recession is hitting the summer job market as teens and college students are finding it harder and harder to find employment.

Employment among 16-to 19-year olds in May grew by just 6,000, the smallest increase since 1969, when teen jobs fell by 14,000, according to government data analyzed by employment firm Challenger, Gray & Christmas. In May 2008 and 2009, teen employment grew by over 110,000...

Jobs traditionally given to teens are apparently going to older workers who are willing to take low paying job to make ends meet.

Clearly, steps taken by the Obama administration and Congress are not doing the job. And issues created by the Gulf Oil Spill - decimating tourism and the fishing industries in the South - are likely to make things worse. It time for a change in direction... just in time for the 2010 Congressional Elections.

Are layoffs killing, rather than saving, our companies?

When the Great Recession hit, layoffs were the go-to strategy for most companies. They cut works left and right in an effort to increase efficiency, and dump long-term liabilities Newsweek is running an interesting article summarizing a series of studies on the effects of layoffs on companies, and the results are interesting. For the most part, layoffs lead to less productivity and less profitability for companies.

Layoffs don't even reliably cut costs. That's because when a layoff is announced, several things happen. First, people head for the door—and it is often the best people (who haven't been laid off) who are the most capable of finding alternative work. Second, companies often lose people they didn't want to lose. I had a friend who worked in senior management for a large insurance company. When the company decided to downsize in the face of growing competition in financial services, he took the package—only to be told by the CEO that the company really didn't want to lose him. So, he was "rehired" even as he retained his severance. A few years later, the same thing happened again. One survey by the American Management Association (AMA) revealed that about one third of the companies that had laid people off subsequently rehired some of them as contractors because they still needed their skills.

Another interesting correlation often forgotten by management is that your employees are also your customers. Every employee laid off is an employee no longer able to afford your services. This can lead to a downward spiral as every lost employee cuts demand, which leads to calls for more cuts.

Clearly, we need to rethink the knee-jerk turn to layoffs when the economy goes south. I am hoping no one calls for a legislative solution here. Better it come from the managers themselves. But it may be inevitable.

Is I.T. Responsible for the Economic Crisis?

I work in Information Technology, so I am sharply aware of the dangers inherent in a badly-built set of systems. It is not just the risk of the Blue-Screen of Death that Windows users are familiar with, or the spinning beachball that haunts Apple users. Even a system that never crashes can be a danger to your business if it doesn't get you the info you need, when you need it. A logical question then, is whether better I.T. systems could have prevented the Economic Crash.

This fragmented IT landscape made it exceedingly difficult to track a bank’s overall risk exposure before and during the crisis. Mainly as a result of the Basel 2 capital accords, many banks had put in new systems to calculate their aggregate exposure. Royal Bank of Scotland (RBS) spent more than $100m to comply with Basel 2. But in most cases the aggregate risk was only calculated once a day and some figures were not worth the pixels they were made of.

During the turmoil many banks had to carry out big fact-finding missions to see where they stood. “Answering such questions as ‘What is my exposure to this counterparty?’ should take minutes. But it often took hours, if not days,” says Peyman Mestchian, managing partner at Chartis Research, an advisory firm.

Of course, it never helps to blame technology for the failings of human nature and human decisions. But poor human decisions about technology can lead to even more poor human decisions. Quality counts.