Barometer for the Economy

According to the February 3, 2009 edition of the WSJ.com, UPS is reacting to the down-turn economy. With revenue and volume decreasing UPS has reported fourth-quarter profit, but the company said it is “freezing management salaries and suspending its 401(k) matching contributions to cut costs.” The company has “also consolidated its operating districts, reduced air segments and eliminated some package handling operations“.

UPS and FedEx are considered a barometer for the state of the U.S. economy. The two companies combined move an average of 22 million packages a day. UPS has had to respond to the market as more customers are shipping in bulk shipments via railways. According to Kurt Kuehn, UPS’s financial chief, 2008 will undoubtedly be one of the most difficult in our history. “Since economists do not expect any meaningful recovery until2 010, earnings in 2009 will suffer. Lower volume levels will put further pressure on margins.”

So if UPS and FedEx are indicators of our general economic conditions, how is your T-E organization addressing the pressure on profitability? What operating costs can be trimmed, without significantly affecting program services? Is fundraising events important? Is marketing?

2009 will be a difficult year for many companies, private and public, for-profit and non-profit. Be aggressive in understanding your organization’s operating needs/margins, budgets and donor/grantor requirements. Communicate to your employees, vendors, bankers and significant donors. Don’t hide from this recession. Be stewards and provide public benefit in accordance with your exempt purpose.