Downsizing has its price

A 9-yr-old would understand that chopping workers from the payroll will save a company money. But he might not understand how it could cost a company money.

10/01/1999


A 9-yr-old would understand that chopping workers from the payroll will save a company money. But he might not understand how it could cost a company money.

One way this might happen is via the side effects of lowered morale, reduced productivity of remaining workers, damaged public relations both in-plant and in the community, plus resignations of employees you may not want to lose. Another side effect coming more and more into play these days involves the surge of unionization in U.S. plants.

"After years of eclipse," writes Marc Levinson in Newsweek , "America's much maligned labor movement is finally enjoying some sun." He goes on to say, "Anger over corporate cutbacks and meager pay hikes is giving the movement its biggest boost in decades."

A sobering thought, as Maintenance Manager Harry Forstner learned the hard way. Forstner was in overall charge of maintenance in the company's main and three subsidiary plants. Responding to top management's continuing pressure for improved bottom line results and a leaner operation, he felt the timing couldn't be better to become a hero in his own right and give his career a nice boost.

With this thought in mind he designed a "restructuring plan" that would chop almost 100 employees from the payroll, and save the company thousands of dollars. Proud as punch, he marched with his brainstorm into Plant Engineer Arthur Gordon's office.

Question: How do you like Forstner's rationale? Is this a good way to win top management recognition? Or not?

Gordon's response: Gordon winced when he heard Forstner's plan. "Grate idea," he said. "That's spelled G R A T E. I'll tell you why. We have to weigh the savings against the potential loss. The dollar payroll deduction is clear. Less obvious is the loss in terms of skilled people who will find other jobs with the training and experience investment the company made in them down the drain. Not to mention the negative morale jolt that would result in causing some employees we don't want to lose to resign. Plus the adverse public relations effect on the community. And on top of that, with the union pressing to get in here for months, this could be just the kind of break that they need. I'm glad you're thinking in bottom line terms, Harry, and while a a few cuts might be in order, firing 100 people in one shot could be unsettling enough to cancel any gain we might make."





No comments
The Top Plant program honors outstanding manufacturing facilities in North America. View the 2015 Top Plant.
The Product of the Year program recognizes products newly released in the manufacturing industries.
The Engineering Leaders Under 40 program identifies and gives recognition to young engineers who...
Prescriptive maintenance; Hannover Messe 2017 recap; Reduce welding errors
Safety standards and electrical test instruments; Product of the Year winners; Easy and safe electrical design
Safer human-robot collaboration; 2017 Maintenance Survey; Digital Training; Converting your lighting system
Mobility as the means to offshore innovation; Preventing another Deepwater Horizon; ROVs as subsea robots; SCADA and the radio spectrum
Future of oil and gas projects; Reservoir models; The importance of SCADA to oil and gas
Big Data and bigger solutions; Tablet technologies; SCADA developments
Automation modernization; Predictive analytics enable open connectivity; System integration success; Automation turns home brewer into brew house
Commissioning electrical systems; Designing emergency and standby generator systems; Paralleling switchgear generator systems
Natural gas for tomorrow's fleets; Colleges and universities moving to CHP; Power and steam and frozen foods

Annual Salary Survey

Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.

There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.

But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.

Read more: 2015 Salary Survey

Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Society for Maintenance and Reliability Professionals an organization devoted...
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.
Featured articles highlight technologies that enable the Industrial Internet of Things, IIoT-related products and strategies to get data more easily to the user.
Compressed air plays a vital role in most manufacturing plants, and availability of compressed air is crucial to a wide variety of operations.
This digital report will explore several aspects of how IIoT will transform manufacturing in the coming years.
Maintenance Manager; California Oils Corp.
Associate, Electrical Engineering; Wood Harbinger
Control Systems Engineer; Robert Bosch Corp.
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
click me