One of the big decisions that company managment must make is the split between labour and capital (ie equipment). Whether this is a tree crew versus a crane or robots versus assembly line workers in an auto plant.
It is easy to become more productive by getting more equipment, but the challenge is matching your equipment to you market. While OD's crew can pound out a tree with crane and grapple chipper 5x faster than an all labour crew, there is a need for management to find 5x as many jobs to keep things moving. Just ask the automakers what happens when the public won't buy as many cars as you can produce.
This makes an interesting case study on business strategy. OD's boss is in a high risk/high reward arena. The business risk is another well equipped company moving into the area and saturating the market, or the number of potential customers drying up. At least with an all labour crew, you are flexible in the type of jobs you can take on. Remember with high risk also comes a larger probability of failure.
That's probably the most intelligent thing I've read about the business side of it since I started subscribing here.
Two more factors to put in there is first, how much buying power do you have? Do you just have enough to get the heavy equipment on payments, or do you have enough to get them on payments and then a lot more? Secondly, when things do take a turn or dry up, the heavy equipment can be sold off, even liquidated, or the payments given to someone else if need be. The major portion of he money towards the equipment comes back when the equipment is sold off.
Now if the company doesn't have the buying power to get what ever it would ever want so to speak, then if things dry up, just lose the heavy equipment. Lose it, and count the money made over money spent on heavy equipment after folding or what not.
If the company does have major buying power, and could float threw dry spells, expand or down size given the circumstances in the market all the while without folding the whole company, then it can shrink its prices to remain competitive during dry times. Just pay staff and for supply, while reaching back to what ever kind of buying power had to pay for those machines. What ever the remedy through the low times, it doesn't have to fold because although it is losing money during a few months or more (yikes) it does not have to fold and sell off the assets simply because it had more buying power than what it was worth to begin with. It is not sole dependant on the high market.
This company that is stronger financially can actually come out on top of the other companies that are its competitors which have the heavy gear too. While they are folding, the stong company stays a float soaking up the market and notarity that comes with being the only duck on the pond. Therefore, it gets even stronger while the market is dry, and more so when the market returns.
I wonder if there is even one subscriber to this forum that owns and has that kind of buying power that subscribes to this site. The company that JeffLovstrom is a ranking member of probably has that kind of financial clout. It covers a big portion of Southern California, does all kind of govt. jobs and lots of other biggies, so I assume it could reach way down in the wallet.