Business slowdown: Reduced work week or layoffs?

We have to face facts," Plant Engineer Ralph Cummings told Maintenance Foreman Al Gorman. "With orders off 20%, we can no longer support the current payroll load. We've got people sitting around on their butts." Gorman frowned.
By Raymond Dreyfack August 1, 1999

We have to face facts,” Plant Engineer Ralph Cummings told Maintenance Foreman Al Gorman. “With orders off 20%, we can no longer support the current payroll load. We’ve got people sitting around on their butts.”

Gorman frowned. He had been expecting this.

“I hate to do this,” his boss said. “But we have no choice. We’ll have to lay off a couple of men.”

“I can’t argue with the rationale,” Gorman said. “What I’m afraid of is that a layoff could cost us more in the end than we save.”

“How do you figure that?”

“The guys on the maintenance crew are all experienced employees. A heavy investment has gone into their training and development. If we let them go, they’ll find other jobs. When business picks up it’ll cost us a bundle to break in and train their replacements.”

“That’s good thinking,” Cummings conceded. “Which leaves us with only one alternative: Cut the workweek from 40 hr to 35 hr, at least on a temporary basis.”

Gorman’s face brightened. “That makes good sense to me.”

Cummings nodded. “Okay, consider it done.”

But when the announcement was posted on the bulletin board that afternoon it triggered a storm of protest.

“We’ve been on a 40-hr workweek for years,” a spokesperson complained. “Management can’t unilaterally cut our income like that.”

Gorman disagreed. “Management is obligated, and has a right, to act in the company’s best economic interests.”

The spokesperson threatened to sue.

Question: If the threat is carried out, how would you rate management’s chances of winning?

Plant engineer’s decision: “The shortened workweek stands,” Cummings said. “A 40-hr workweek isn’t guaranteed by the labor agreement. Nothing prevents management from cutting it to 35 hr to avoid a layoff.”