Corporate Survival Mode

(Via Bloomberg News)

"It was a real wake-up this Christmas when we saw double-digit sales decreases for many retailers," said George Whalin of Retail Management Consultants in Carlsbad, Calif. This economy "is going to make every retailer think differently about their business."

A rethinking is already underway in the trucking industry, where companies have been slashing capacity and implementing fuel-saving technologies to help offset a drop in cargo shipments that started well before the recession.

In a sign of just how much uncertainty trucking companies have about the future, healthy companies are passing up bargain prices on foundering competitors, said David Ross, an analyst at Stifel Nicolaus. The reason: No one seems certain when the added capacity will be necessary.

"There are very few trucking mergers right now -- essentially they are letting companies go out of business if they can't make it -- even though the prices for those companies are cheap," he said.

In the bio-tech industry, where raising capital has become vastly more difficult, some firms are making cuts to research and development -- reductions they have long been loathe to make because that's where their promise lies. But in this environment, R&D budgets are no longer a sacred cow, said David Windley, an analyst at Jefferies & Co.

"There are about 385 public biotech companies and there's not enough money to go around," Windley said.

It was a lack of cash that also prompted Coachmen Industries, an Indiana manufacturing company, to reshape itself amid the crisis.

Alarmed by mounting losses in its recreational vehicles division, and sensing that a rebound would be far off, Coachmen in the fall put its RV operations on the block. It quickly found a buyer, signed a deal, won approval from shareholders and, on Dec. 26, finalized the sale.

All told, it took about two months for Coachmen to get out of a business it had been in for more than 40 years.

In more stable times, the company might have been more patient with the RV division, which already had slashed expenses to operate more efficiently. But sales weren't materializing, and Coachmen didn't have a war chest of cash to wait out the recession.

Warren Buffett's Berkshire Hathaway bought the business for less than book value, which essentially is a measurement of how much a business would have left over in assets if it suddenly quit running.

"With Warren Buffett having the cash to be able to withstand the downturn, that's the magic," said Tom Gehl, director of investor relations at Coachmen, which is now primarily focused on its more profitable manufactured housing business.

Gehl predicts the RV business will come roaring back when the economy recovers, as consumers who have been holding off on purchases release some of their pent-up demand. But the profits will be for another company, not Coachmen, to reap.