I'm confused as to your proposed solution. Should the new employees not been hired, and existing employees overworked due to understaffing? Should they have hired contractors and not paid benefits like healthcare?

The companies I'm aware of that exist in cyclic industries (game dev, retail) tend to either have brutal cyclical layoff periods, leverage a ton of contractors, outsource their work to other firms, or hire seasonal workers.

What in your view is "the right way to handle this sort of thing"?