Editor's focus.

Self-fulfilling prophecy is a term most often used to describe a negative set of conditions and outcomes. Predicting a disaster while taking steps to prepare for and ultimately help create the disastrous outcome is one definition of the phenomenon. It can be difficult to measure the effect of behavioral psychology on the economy, but some observers believe that there is an aspect of self-fulfilling prophecy to the business cycle.

If that's the case, business owners and executives are faced with an important decision in how they approach planning for 2002. Many companies who started out planning for growth in 2001 had to shift strategies in mid-year, resulting in cancelled projects and job layoffs.

But is the slowing economy now a snowball rolling downhill and gaining mass and momentum as it moves? Manufacturing and service companies are all trying to figure that out, and then react appropriately. Certainly, no one wants to be buried in an avalanche of poor decisions.

When a herd mentality emerges, and all companies decide to slash budgets and restrict future growth opportunities in concert, this is when a self-fulfilling prophecy scenario could set in.

Scrap and recycling companies have grappled with turmoil in their markets for several consecutive quarters now. It would seem understandable if their expectations are low, and their plans are restricted to protecting their businesses by slashing expenses and capital spending.

But not all business owners have come to the same conclusion. Both the scrap metal and paper recycling industries have been involved in a lengthy period of volume growth. They have also spent much of the past decade getting acquainted with new export destinations and, in some cases, importing opportunities that have made demands on their time.

The down cycle is being viewed by some as an overdue opportunity to step back and take a look at the efficiency of their operations. (It's an opportunity perhaps only available to those companies who understood that substantial profits had to be set aside in the good times in order to get through the down cycles.)

Efficiency is a business practice that never goes out of style. Plant operators who were primarily concerned with volume over the past ten years may never have blocked efficiency out of their minds, but they may have put it on the back burner.

When volume declines and operating budgets are trimmed, efficiency regains its spot on top of the priority list. For recyclers, a re-emphasis on efficiency is taking several forms.

In features scheduled for the next two issues of Recycling Today, as well as in news snippets throughout 2002, we are going to be looking at what steps recyclers are taking to maximize the efficiency of their processing and trading operations.

For the makers of processing equipment, many of the steps being taken are resulting in orders in what many feared would be a gloomy market. The orders are coming from recyclers who are stepping back and calculating their operating costs in greater detail than they ever have before.

These are business owners who are taking the advice of an old football coach who said, "If you plan on failing, you probably will." The plans these recyclers are making are for long-term success, not for dodging an inevitable failure.

If these decisions mark a small step toward a more efficient use of America's capital (as opposed to investment bankers pouring millions into selling dog food online, or a head of household racking up credit card debt collecting lawn gnomes on E-bay), then it is a step in the right direction in resuscitating America's economy.