On the internet you can read a hell lot of advice how your company could survive in 2009. Most of them recommends quality and efficiency improvement along with marketing campaigns. Most of them suggests that downsizing and layoffs are stupid. I think these ideas are misleading.

The situation is the following:
1) Market is shrinking. Even if you keep your customers, the overall customer base is smaller then one year ago
2) Much difficult to get money, because banks are afraid to lend any.
3) The stock level is high. Everybody wants to get rid of the stock at any price, so you cannot be competitive.

Honestly, the situation is about surviving. Forget everything else (quality, market share, customer satisfaction). And this rude situation will remain for at least the next 12 months, so you should not stick to temporarily measures.

The long term measures are unfortunately not nice. You must freeze all projects, all improvements. If you could work with the existing methods and tools, you will be able to do it in the next years. Spend no money on "modernization".

Also you can downsize your company. Pay cuts or production halts are worst then layoffs, but with less effect. People prefer layoff over pay cut.

As about the suggestions:
- Quality improvement -> cut bad quality product lines instead of doing investment and projects.
- Efficiency improvement -> reduce staff instead of implementing new methods.
- Marketing campaigns -> focus on stock reduction instead of attracting new customers.

Some people said in crisis the positive thinking helps, look at it as opportunity not as threat. This is wrong. Look at the opposite: only those firms will survive who are willing to counter the threat and not afraid to downsize.
The collapsed companies in the news are those who refused to accept the crisis and claimed that everything is fine - until the very last moment.

Additionally, this is not the first recession we experience, but maybe the biggest in our life. We know what helped last time: cut cost, reduce team, freeze spending, restructuring.  Please do not be surprised.