09-06-2015, 07:11 AM
(09-06-2015, 06:22 AM)rapidacid Wrote:(09-05-2015, 06:35 PM)KenBob Wrote: Trying to revive a cut capital expenditure will cost much more than if the capital expenditures were kept stable.
Can you expand on this?
When projects are stopped then restarted there are all kinds of friction.
The biggest is the loss of people who know what they are doing. Skilled people who are laid off will not necessarily return if they have found another job. In addition, any skill that is not used will diminish over time.
Deferred equipment maintenance will be a bottleneck. The amount of equipment refurbishment will exceed the people available to perform this refurbishment. Equipment will need replacement which involves difficulties with obsolete equipment and excessive demand on suppliers.
Equipment for new equipment will also cause excessive demand on suppliers, causing delays.
Leases may have lapsed, which can result in delays for renewal or inability to renew the leases.
There are probably other problems. None of these are insolvable; however, they do add significantly to expenses.