Guaranteed Manufacturing Jobs

This all sounds very admirable, but the reality is you are taking employment away from long term workers who have a helped build the company and you are giving it to the newer employees who haven't helped build the company. People can live for short periods of time on reduced wages but in the long term this simply doesn't work.

Layoffs are traditionally a time when companies do house cleaning in an effort to become more competitive. Under these rules that couldn't happen.

In Canada there is a program in place that provides financial assistance to laid off workers for a set period of time. This leaves industry without the burden and provides a safety net for workers.

The free enterprise system needs to remain free to move and change with market conditions and not be restrained, or it won't survive.

"The free enterprise system needs to remain free to move and change with market conditions and not be restrained, or it won't survive."

This is a great statement, but it doesn't happen when the government is involved stipulating conditions under which a company can operate on a day to day basis.

"In Canada there is a program in place that provides financial assistance to laid off workers for a set period of time. This leaves industry without the burden and provides a safety net for workers."

This program doesn't leave the "industry without the burden". The money that it takes to fund the program is taken from industry and the rest of it's tax-paying citizens at the point of a gun" (threat of punishment) and regulation. The businesses can't choose not to pay the taxes that go toward paying for programs that "help" people who aren't working. Many people aren't working because of regulations put in place by legislators that don't understand free enterprise, capitalism and economic cycles. Industry and growth of the economies comes when they are free of backbreaking, needless regulation. Businesses then spend time, effort and money to expand which results in the hiring of more people.

That being said, it is incumbent for business leaders to operate in an ethical way. When they don't, then government has a responsibility to it's citizens to involve the judicial side of government reasonably.

If a company decides to take action in which it chooses to reward those people who are taking ownership of their jobs and performing admirably that's great and shows loyalty from corporate to employee which is becoming harder to find. I have to wonder though, how wise is it to "guarantee" that no jobs will be lost? There are always conditions that an industry can't control, like our current Speaker of the House who said that "corporate aviation is bad", and within days a great deal of negative impact was felt in the aircraft production and service industry. In those conditions a company has to make changes in how it operates. The purpose of a company is to make profit, not to make sure that everyone who works at their business has a job/benefits for life at the expense of the company. If the company fails to survive, more is lost because people won't have jobs at all and the supporting businesses are also hurt.

"The money that it takes to fund the program is taken from industry and the rest of it's tax-paying citizens at the point of a gun" (threat of punishment) and regulation."

You make it sound as if industry is funding this entire program which it isn't. We are those tax paying citizens you are talking about. We have the deductions taken off of our cheques. As an employee I rather like the feeling of having a fall-back should something go wrong. Thankfully over the last 35 years nothing major has required the use of this system for anything more than a few days.

We cannot choose not to pay taxes either, for the same reason that industry can't. The difference is we can't write off near as much as industry can.

All said, you'd will be hard pressed to find and industry that doesn't feel over regulated , an employee who feels they are over paid or a government who feels they have too much control. We all need each other and the truth lies somewhere in the middle.

Known as lifetime employment in Japan. Crumbling round the edges somewhat but companies are still hiring fresh graduates under this system.

I can see an advantage for companies to go this route if the downturn in business is expected to be temporary. There is a cost associated with laying off and then reinstating or having to rehire because those previously laid off are not available. It's less efficient to maintain the same staff level during economic declines for long periods of time because of the overhead burden of the quantity of staff.

The company's burden to cover wages and other aspects of compensation such as insurance, etc. may be $30-$50/hr or more for an employee whose wage is only $20/hr. If the only thing that is cut is the employee's hours (meaning they still get the same medical benefits, same sick leave, same vacation), then the cost burden to the company will increase.

So for instance, if company A and company B both employ 100 people at an average salary of $20/hr and have similar overhead costs making the price of labor $40/hr (their respective employees collectively earn $4,160,000 while costing the company $8,320,000). Along comes a serious recession:

• Company A cuts employee hours in half - employees now collectively earn $2,080,000; the labor rate has increase to $50/hr so those 100 employees cost the company $5,200,000 per year. Reducing it's labor costs by $3,120,000 or 38%.
• Company B cuts it's staff by 50% - the 50 remaining employees now collectively earn $2,080,000 (same as company A); the labor rate stays the same at $40/hr so those 50 employees cost the company only $4,160,000 per year. Reducing it's labor costs by $4,160,000 or 50%.

Which company is in a better position to stay in business long term? How can Company A compete with Company B?

Now it's possible that Company A would also cut benefits in an effort to maintain the cost of labor at $40/hr and may be able to compete on a labor cost basis. However, long term, it's most likely that more talented employees would migrate from Company A to Company B as B offers a better compensation package resulting in Company B becoming more productive.

Company A can compete with Company B through and efficient and stable workforce which is able to concentrate on their job, with renewed determination, that has no fear of being the next one to be let go.

Where Company B employees now have to pick up the work load of those let go, often times involving different tasks which they have to learn how to do, figure out where the data is, adjust their previous coworkers filing system to be inline with their differing thought processes, etc… They will also be slightly disgruntled because it is a rare occasion that those that pick up additional work because of cut back get a pay raise.

The bottom-line, although Company B's operating costs have been reduced, so has its workforce efficiency. Company A's hours may have been reduced but the same skilled and trained personnel are doing the same job, no retraining, no transition inefficiencies.

JavaHead

I see your point and in some cases what you present may be true. \

In my example both companies were cutting back because of a recession. I think I used the phrase "serious recession" to imply significant longer lasting effects on the economy. In such a situation, I don't think the retained employees of Company B would have to pick up much of the work load of the workers who were let go as the entire reason for the lay off is due to lack of work to justify keeping everyone busy.

Since we are dealing with hypothetical companies and gross generalities it's difficult to really debate the details, but I would expect most employees would not be able to be so much more efficient to make up that large of a difference. Of course if the companies were auto manufacturers and Company B axed it's painting department (assuming the painting department was 50 employees), then yes, Company B would have to retrain someone to take over that work. But that's a one time expense for Company B, where as the yearly labor costs are perpetual. So while Company B may not be as efficient during the first months or year of change, I think in the long term B would be greatly more profitable than A.

Regardless there are a number of ways management can approach the change in corporate structure, some may have a negative effect on the workers (putting forth the attitude that the remaining workers should be thankful they still have jobs) or a motivational effect (i.e. engaging the workers in ways to improve the company and assisting those who were let go).

The company I work for has had its ups and downs over the years. They handled the layoffs different each time. One year it was the most jr people who were let go first, another time it was the most senior (more $ saved per employee laid off) and one time the HR director actually said that employees should be thankful they have jobs in response to grumbling employees who were informed there was to be no merit increases. Now she may have been absolutely 100%, we should have been thankful, but such a statement didn't help moral or productivity. Years later during the next down turn, HR went out of their way to help those being let go to find work and keep the remaining employees informed about the outlook of the company. Night and day difference between those two experiences.

smells socialism, I know that fragrance..

I once worked a contract job for Polaroid Corp out of Norwood, MA. They had a business philosophy at the time that essentially mandated a core of full time employees to maintain their business and manufacturing acumen, but hired temps for things like new product ramp ups. The temps were let go when the work ran out.

I spent 18 months there until the new product launched and got an offer to stay on full time to replace another full timer who was leaving. I declined though because the pay rate was such that I could take a year off work after the contract.

Unfortunately, this was just about the beginning of digital cameras so Polaroid went into a decline after that. They did have a good business model, IMO, while it lasted.

Hooker