Or for those of you outside of the U.S., you know it as austerity. As I’ve written many times on this blog, lots of things can be limiting: resources, infrastructure, personnel. But when you have a fiat currency (as the U.S. and U.K. do), money is never limiting–it’s like being on the gold standard while being able to manufacture gold out of thin air. You can no more run out of money than Fenway Park can run out of runs* (you might have inflation or misallocation of resources, but with male employment at a historic low, unemployment high, manufacturing at less than 75% capacity, and real wages down ten percent over the last year, inflation is not a concern). This is why cutting budgets is so stupid. But these cuts not only have macroeconomic effects, they also hurt programs and those businesses dependent on those programs. Case in point–Illumina (boldface mine):
Following yesterday’s announcement that its third-quarter revenues fell 1 percent and that it would undertake a restructuring, Illumina filed a document with the US Securities and Exchange Commission disclosing that it will cut 200 jobs from its global workforce.
As reported by GenomeWeb Daily News yesterday, the firm expects to record a restructuring charge of $15 million to $17 million, the majority of which will be recorded in the fourth quarter. It expects the actions associated with the layoffs to be “substantially completed” this year.
“These steps are being taken to better align the company’s organization and cost structure in consideration of uncertainties associated with academic and government research funding and the global economic environment,” Illumina said in the filing. The cuts equal roughly 8 percent of the firm’s workforce….
During the firm’s conference call yesterday, Illumina CEO Jay Flatley cited a confluence of factors that led to the disappointing results including the reduced NIH budget, global academic funding concerns, and the launch of the firm’s V3 sequencing kits during the second quarter, which resulted in a decrease in consumables revenues per instrument due to reduced runs.
This is very frustrating to read.
Most sequencing technology development and innovation is either done by U.S. companies or by U.S.-based divisions of foreign companies. Thanks to needless cuts, we are limiting further development and economic activity in a sector the U.S. essentially created.
It is that inability to create as much money as it wants that has Greece over the coals. I am surprised no one talks about Argentina. At one point they just defaulted on their debt, came back strong and eventually paid off a small percentage of it. One of the few countries to escape the powerful tentacles of the IMF and EHMs.