To maintain profit growth, several manufacturing companies have responded to the recession by cutting jobs. Harley-Davidson reduced its workforce by 1,400 in 2010 and 1,600 more in 2011. As sales decline, the company has reduced labor capacity at many plants. The same is true at General Electric, Texas Instruments, Coca-Cola and many other companies which have reduced capacity at certain plants, closed selected plants entirely, or dropped product lines. In many of these companies, the profits are held as cash, and the companies are holding off on making any new investments until economic conditions improve. Some analysts say the companies are just shrinking their operations to match the decline in expected future demand; the companies are profitable but smaller.

Required

1. Do the recent actions by these companies support their long-term strategy?

2. How do the productivity gains at these companies affect profits in the short-term and long-term?