Looming Recession

For any business to thrive a coherent analysis of the state of the economy is a key factor. As the CEO of Cemex; the world’s leading building industry I must analyze and align our company to strategic economic shifts that would affect our competing power regarding sales and profits earning. A careful analysis of the prevailing economic trends leads to the conclusion that the American market is about to face another recession soon (The Editorial Board, 2017). The economic help organization gives a subtle definition of a recession as a negative economic growth characterized by the rise in unemployment and increased government borrowing for two consecutive quarters. A recession is differentiated from depression by the fact that depression is more severe. Depression is a severe, long-lasting plunge in the economy characterized by increased unemployment rising above 20%, output fall of greater than 10 %.
The American GDP has seen a minute growth of around 3% for the last two quarters. The trend is a definite recipe for an economic plunge in the nearest future (The Editorial Board, 2017). Economists have predicted a 20% chance of the recession happening in the next one year. Our company has already started feeling the pinch of economic plunge as evidenced by the reduced annual sales this year. The largest market for our company has been in tackling building contracts within Canada and Mexico. With trump calling for the withdrawal of America from the North American Free Trade Agreement (NAFTA).

The number of contracts we handle abroad has drastically reduced. The move has seen Cemex industry losing close to 30% of its market for the supply of construction materials (Zumbrun, 2017).

By America pulling out of NAFTA, our company can no longer secure affordable labor in Mexico anymore. The move has reduced the profit margins of the company tremendously as more input is injected in transporting and paying American workers to constructions within the country. The fewer jobs that we get in Canada and Mexico now face huge taxations (Zumbrun, 2017). The taxations reduce the committed efforts of our country to working abroad as the returns are not sufficient.
The impact of NAFTA withdrawal has also affected the American people. % million Americans lost their jobs immediately the withdrawal was made official. Another 14 million Americans face the fear of losing their jobs. The move has seen more harm inflicted on the American citizen who depends on the Mexican and Canadian market for employment (Zumbrun, 2017). In as much as the move has reduced the exploitation of cheap labor from outside countries, therefore, creating employment for locals, it has led to the death of other companies (The Editorial Board, 2017). Restaurants and other shop vendors who depended on the extra population to make a living are now struggling to keep their businesses afloat.

The best move for our company at the moment is to cut back on expenditure. The company has to cut lose close to 20% of its employees as a means of withering the hard time that has already started to manifest itself. It is also my advice as that the company should start liquidating some of our company investments. Part of the money that the company has injected into the stock market should be liquidated for future use when the recession finally hits (Zumbrun, 2017). Due to the increased cost of working abroad, it is also my advice that we promote local business and pull back a little in handling foreign business ventures.

References

The Editorial Board. (2017). A Nafta Recession?. WSJ. Retrieved 15 February 2018, from
https://www.wsj.com/articles/a-nafta-recession-1510522167
Zumbrun, J. (2017). Economists Believe a Recession Is Likely Within Next Four Years. WSJ.
Retrieved 15 February 2018, from https://www.wsj.com/articles/economists-believe-a-recession-is-likely-within-next-four-years-1476367202