While Wall Street whipsawed wildly last week, America's companies tried to maintain their composure. Though many corporate executives were rattled by what has happened to their firms' stock, and their own personal wealth, since August, most were determined to stay calm and not make any rash moves. Almost no one rushed to slash production or shelve capital-spending plans. But many companies began taking a hard look at their operations, realizing that further market declines could bring on a recession. For companies that had been planning to issue new stock or for young firms hoping to go public, the impact of the Black Monday crash was immediate and devastating. Many were forced to put their plans on hold until stock prices rise substantially, and they faced the unsettling possibility that a renewed bull market might not occur anytime soon.
Anxiety was especially high in Detroit, where automakers feared the crash could deal a new blow to car sales, which are already slumping. Maryann Keller, a prominent auto analyst with Furman Selz Mager Dietz & Birney, a Manhattan-based investment firm, predicted that U.S. sales of cars and trucks would fall about 15% next year, to 9.5 million vehicles. One reason for her gloomy forecast, she said, was that the loss of wealth caused by the stock- market decline would have a "significant effect on consumer confidence and the ability to spend."
Prompted in part by the gyrating market and bleak sales prospects, Chrysler and General Motors said they would accelerate their cost-cutting campaigns. Noting that some people may now decide to put off the purchase of a car, Chrysler Chairman Lee Iacocca announced that his company would speed up previously planned efforts to reduce its payroll. Iacocca intends by the end of the year to trim 3,500 white-collar employees from Chrysler's salaried work force of 38,000. In addition, the company will suspend production at an assembly plant in St. Louis for two weeks this month and will cancel plans to produce the Allure coupe. At GM, Chairman Roger Smith said the company would cut its costs by $4 billion, or 4%, next year. Some of the savings will come from accelerating a program to close 16 aging manufacturing operations.
Most other companies were anxiously waiting to see how much fallout the stock crash would generate. "The dust hasn't settled," said Paul Jones, a spokesman for Westinghouse Electric in Pittsburgh. "Nobody knows what to do. You hear talk of recession, inflation, deflation, all kinds of things." But as the stock market continues to shimmy, many firms are already trying to assess the damage to customer confidence. Said Gerald Schultz, president of Bell & Howell, a Skokie, Ill., publisher and information-services company: "We're trying to sensitize our people to get their feelers out, with their customers, with their suppliers and their staff, to see what's going to happen."