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."





Top Plant
The Top Plant program honors outstanding manufacturing facilities in North America. View the 2017 Top Plant.
Product of the Year
The Product of the Year program recognizes products newly released in the manufacturing industries.
System Integrator of the Year
Each year, a panel of Control Engineering and Plant Engineering editors and industry expert judges select the System Integrator of the Year Award winners in three categories.
May 2018
Electrical standards, robots and Lean manufacturing, and how an aluminum packaging plant is helping community growth.
April 2018
2017 Product of the Year winners, retrofitting a press, IMTS and Hannover Messe preview, natural refrigerants, testing steam traps
March 2018
SCCR, 2018 Maintenance study, and VFDs in a washdown environment.
April 2018
ROVs, rigs, and the real time; wellsite valve manifolds; AI on a chip; analytics use for pipelines
February 2018
Focus on power systems, process safety, electrical and power systems, edge computing in the oil & gas industry
December 2017
Product of the Year winners, Pattern recognition, Engineering analytics, Revitalize older pump installations
Spring 2018
Burners for heat-treating furnaces, CHP, dryers, gas humidification, and more
April 2018
Implementing a DCS, stepper motors, intelligent motion control, remote monitoring of irrigation systems
February 2018
Setting internal automation standards

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

The Maintenance and Reliability Coach's blog
Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
One Voice for Manufacturing
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 Maintenance and Reliability Professionals Blog
The Society for Maintenance and Reliability Professionals an organization devoted...
Machine Safety
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
Research Analyst Blog
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Marshall on Maintenance
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
Lachance on CMMS
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.
Maintenance & Safety
The maintenance journey has been a long, slow trek for most manufacturers and has gone from preventive maintenance to predictive maintenance.
Industrial Analytics
This digital report explains how plant engineers and subject matter experts (SME) need support for time series data and its many challenges.
IIoT: Operations & IT
This digital report will explore several aspects of how IIoT will transform manufacturing in the coming years.
Randy Steele
Maintenance Manager; California Oils Corp.
Matthew J. Woo, PE, RCDD, LEED AP BD+C
Associate, Electrical Engineering; Wood Harbinger
Randy Oliver
Control Systems Engineer; Robert Bosch Corp.
Data Centers: Impacts of Climate and Cooling Technology
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
Safety First: Arc Flash 101
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
Critical Power: Hospital Electrical Systems
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
click me