Evan on... Cost-cutting

Ayamn Asfari, chief executive, Petrofac

An eye on the costs

Tough times call for tight belts - but how do you cut costs in a recession?

After The Bottom Line looked at cost cutting, Evan Davis asked How easy was it to persuade the panel to identify what they might cut to face up to the downturn?

Watch

You need the Flash Player (version 7 or higher) to view this clip - download Flash.

Listen

Save this mp3 file to your computer

You need the Flash Player (version 7 or higher) to use our mp3 player - download Flash.

Save this mp3 file to your computer

Read

Well let’s reflect on what we’ve just been hearing, and our first substantive discussion was on the subject of cost cutting. Now, obviously it’s very topical but there’s quite a dilemma, it’s how does a company cut the costs that are unnecessary and that it can get away with without cutting the core of the business, its reputation, the stuff it’ll need when good times come again and it needs to grow.

It was interesting, I thought, that all of them completely recognised that dilemma, in fact they were articulating that dilemma, but none of them really quite were willing to address it.

They were all, I thought, very strikingly talking about opportunities, talking about investment, they were talking about seeing their way through the bad times and they could see that they needed the good times to come and they were going to be ready for them when they did come.

But we never quite got to how it is that you decide which unnecessary bits of the business are the ones you let go of. Maybe the looking ahead and looking to the good times is a good business coping strategy for the rather difficult times we’re in.