The Commonplace Layoff

by Fred White | October 17th, 2006

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Isn’t it strange how commonplace layoffs have become? Whether through mergers and acquisitions or out-of-left-field “consolidation” measures, it appears that the common worker has become all too familiar with the unpleasant side of “streamlining operations.” Let’s take a look at recent layoff activity to determine if the end justifies the harsh means.

Sure, stuff happens, as the saying goes, but this blogger thinks that stuff is going down much too frequently, often serving as a fine excuse to trim expenses associated with payroll and health benefits. Let’s take a look at recent layoff activity to determine if the end justifies the harsh means.

First up is metal and plastic packaging supplier Ball Corp., which recently announced that it will close two of its North American manufacturing facilities as part of a realignment of the company’s Metal Food & Household products. The announcement comes on the heels of the company’s acquisition of U.S. Can Corp. earlier this year. John A. Friedery, Ball’s COO had this to say:

The opportunity to consolidate manufacturing operations into fewer facilities is critical to us realizing the synergies we knew were achievable following the acquisition. We are carefully studying our entire manufacturing structure and expect there will be other opportunities to improve efficiencies by further realigning production capacities.

Wonder what those “other opportunities to improve efficiencies” could be…More layoffs, perhaps, in addition to the 340 already forced to pound the pavement from this last exercise in streamlining operations?

While Ball’s layoff strategy might be a little bit on the subversive side, the opposite is true for Bobcat, which likes to ignite a layoff stance that contains all of the subtlety of a North Korean nuke test, based on an Associated Press reports. The company said it is temporarily laying off 950 workers — coincidentally, at the same time union workers at the plant begin labor negotiations. That takes cojones, dear IMT readers, and not surprisingly, Randall Edison, treasurer of the United Steelworkers Local 560, is, well, he’s pretty upset:

Read between the lines. A hungry worker is probably much easier to deal with. The general feeling is, it’s pretty poor timing just when we are beginning our negotiations.

Edison’s union represents about 1,050 workers in Gwinner, in southeastern North Dakota. Union workers at the company’s sister plant in Bismarck went on strike recently, after their four-year contract expired. Bobcat spokeswoman Wendy Bost said the Gwinner layoffs are unrelated to the Bismarck strike. “I have nothing further to comment. I’m not in a position to provide details,” said Bost.

Hey, thanks for being so forthcoming with the folks who are running your operations. We’re sure it’s appreciated by the workers.

Alright then, let’s crawl on over to some recent Caterpillar news. According to MarketWatch, the company is realigning its manufacturing segments:

The maker of construction, mining and other large equipment said Monday that its manufacturing operations will be realigned as of Dec. 1 into three new segments — U.S. operations, heavy construction and mining, and infrastructure development. Currently, Caterpillar’s manufacturing divisions are comprised of wheel loaders and excavators, track-type tractors, and mining and construction equipment.

The changes show that Caterpillar continues to evolve and is willing to make the changes needed to be better aligned with its customers, Morningstar analyst Scott Burns said. “It’s a pretty good manufacturing company that’s becoming a very good manufacturing company,” Burns said.

This may be true, and if so, fair enough. But we wonder how many workers will be affected by Caterpillar’s business overhaul. Does the company, as well as the other aforementioned manufacturers, have the best interests in mind for their workers? And does that even matter any more?

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Comments:

E. Leonard Chazin

October 17, 2006

We have become a contract worker society, and gone are the good ole days of the 1950s, post-war, IBM “one employer for a life” workforce. Nowadays, we all need to continually develop and evolve, be prepared to be downsized/right-sized/re-engineered…whatever, at any moment. It’s unfortunate, but let’s not stick our heads in the sand and pretend it’s not happening. What does everyone else think?

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Robert Haag

October 17, 2006

As I former resident of North East Ohio and California, I am painfully aware of being laid off. I was laid off twice in California and saw my hometown in Ohio decimated by layoffs and industries leaving. I read one time by an economist that layoffs were admittance by management of their mistakes. However, it does not help the professional who, with a handful of college degrees and years of management experience, has to work at Wal Mart to survive. Layoffs are a most distructive force in our society today. As a young person, I was raised to go for the American dream…now it seems for many a nightmare. All I can say is I hope some day this philosphy of laying off people by management stops before it is too late for our society.

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Ron Bowman

October 17, 2006

I don’t know how common this is but I heard about an incident just this week that relates to lay offs. The story is as follows:

A manufacturer of industrial equipment hired a new machinest. The new man reported to work and was given some assignments. His output was 3 to 4 times the output of the other machinest in the shop. The investigation that insued revealed:

1. The other machinest had deliberatly increase the time required for every job because they were afraid the company was going to run out of work and they would be laid off.

2. The new worker had an ethical standard that compelled him to not short-change the company.

3. The managers were not machinest enough nor involved enough to see the problem.

4. The company was losing significant business because of price.

5. The company was considering closing the plant because labor costs were too high.

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J Taylor

October 18, 2006

Re: Ron Bowman’s comment: This type of situation can only develop over a long period of time. The mangement involved is probably as lazy as their workers. The first responsibility of line management is to know what your people are capable of producing, not to be a tyrant, but to produce in an efficient and cost-effective manner. If they don’t understand what is involved in producing a product, they better find out and fast! This is the type of operation that gets eaten for lunch by competition, foreign and domestic.

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E. Leonard Chazin

October 18, 2006

There may be issues of workforce laziness, management ignorance, or cost cutting by outsourcing to have production done by people being paid pennies on the $ because there countries’ costs of living are so low. Seems to me alot of companies are offshoring or outsouring everything that’s not their core competency. What happens when they start going outside the US to do their core competencies? Isn’t that a recipe for disaster?

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JOHN

October 19, 2006

Our personal actions as consumers and managers of our personal affairs are a small microcosm of the somewhat larger system in which we are employed. We suffer as those charged with making the same kinds of decisions we make in our personal life, make them for the company for whom they work. Those decisions are basically not greatly different from our personal decisions about where to buy; what to buy; how much to spend; the relative value of the goods or services we select and more importantly, how the spend will effect our financial position in both the short and long term.

If we are honest, as American working persons, we want the best deal dollar-wise in the short term and seldom really give a lot of consideration to how we might effect others who offer the goods or services. If we did, you would not see the retail drug industry moving to three major chains nation-wide. The local hardware store is being eliminated by the major big box warehouse retailers, corner grocery stores are gone along with the corner drug store. We continue to see and hear the lament of the union worker and the union organizer, but on any given Saturday, walk thru the local Wal-Mart parking lot and count the various “union friendly” bumper stickers on the back of pick-up trucks. We are there giving “aid and comfort” to the vary “enemy” who is the largest trading partner of the third world that is taking the same jobs away from the drivers of those trucks.

Why are we doing it?

Because we [read manager] are making the same decisions in the running of our personal life [read business] as those whom we condemn…perceived value for dollar spent and action that will allow us to be more solvent in the short term.

How and will it end…who knows, but this seems sure…as long as we as consumers demand the best price…US companies are going to do what needs to be done to provide it. If that means off-shore for pennies to dollars in wages paid..so be it. This is not only true for consumer goods, but equally true for goods and services needed in the manufacturing world. I agree that lay-offs are a very distructive force both to individuals and to the towns they live in. But maybe the saying “we have met the enemy and they are us” rings very true!

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Nick S.

October 26, 2006

Well, if you move to India or China to make goods that you will sell to Indians and Chinese, that is one thing. This is something that our governments should encourage.

To move the business over there just to bring a cheaper product here is also OK, as long as you will pay the duty and trade tariffs on the imported goods.

If you don’t pay taxes here as a business, if you manufacture overseas and make a profit selling here and your main office is in Bahamas to avoid taxes, that’s not OK anymore.

In the 1990s, when the other president Bush forced the Japanese companies that wanted to sell cars in the US to make the cars here, he should have mandated the same for US companies that sell other products than cars here.

There is more to it than to say that we are guilty because we buying Chinese products in Wal Mart for cheap. We vote our government in office and pay taxes so that they protect our way of life. Unfortunately, they are more interested in facilitating large profits for big business lately, and then we’re told that is our fault because we buy Japanese cars and shop Chinese products at Wal-Mart. What a poor excuse.

We better be more careful who we put in office and have better control over the policies they support such that we have representation true to our interests.

Go out and vote in November.

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Nick S.

October 26, 2006

P.S. Well, to those that say that we manufacture in China and India just to make a cheap product for the American consumer, (It’s the same like one would believe the government when it says that it’s for our own good), I want to say this: Here we pay the unionized workforce $25.00 to $35.00 per hour.

If we pay the Chinese or Indian worker, say, $2.50 to $3.50 for ease of calculation (the ratio is actually less), that will make a ratio of 10:1. Well, the Wal-Mart products are not 10 times cheaper; actually they are hardly even 25% cheaper. Where is the difference? You find it in the pockets of big corporations that are able to get more and pay fewer taxes than ever before.

I am not an advocate for a socialist system, but I don’t want to see our way of life evaporating in front of my eyes, while my kids and grandkids are going to pay the price.

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