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Think Strategically, But Act Tactically

Manufacturing and construction are picking up in the United States, but it's still likely to be a year of modest growth, so companies will need to focus on boosting efficiencies.
By Mark Roberti
Jan 09, 2012The new year got off to a pretty strong start in the United States, economically speaking. Not long after the ball dropped in Manhattan's Time Square, ringing in the arrival of 2012, reports came in that manufacturing had grown last December at the fastest pace in six months, and that unemployment had dropped to 8.5 percent—its lowest level in almost three years. Construction of new housing is up, and so is consumer confidence.

The U.S. stock market closed up on the first day of trading, and when that happens, stocks are almost always up for the year. Still, the U.S. economy is hardly booming—housing construction is about half of what it should be, for example—and there are some worrying signs that the sovereign debt crisis will have a major impact on this year's economic growth in the region. In addition, China's manufacturing sector is slowing down.

The biggest concern is that consumers worldwide are still loaded with debt, and will not be spending aggressively any time soon. In the United States, 70 percent of the economy is tied to consumer spending, so it's likely to be another year of modest growth for most companies.

Smart companies are planning to use this period to boost efficiencies—not just to improve the bottom line, but also to enhance competitiveness for when the economy does inevitably grow. Others are saying that they can't invest because their margins are under pressure. I think it's a mistake to sacrifice long-term competitiveness for short-term profitability—and it's not necessarily an "either/or" choice. Companies can invest in RFID and other new technologies, and still maintain profitability.

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