Monday, January 30, 2006

Trouble with US Companies

I have been following with much interest the trials and tribulations of U.S. industries, notably the automobile industry. I live in Western New York, home to a Delphi, Ford, and GM plant - and other plants producing parts of the auto, I am sure. Any news related to these huge employers will ultimately impact all of us in WNY. The same could be said of Bethlehem Steel when it closed in the 1980's. That impact is still, sadly, being felt in WNY. Anytime news of other plants closing or considering closing hits, WNY listens, biting its nails.

An article in the Buffalo News caught my eye because it disturbed me (link above). Let me make a few statements before I begin my rant. First of all, while I try to stay abreast of what's happening in these industries, I will not claim to know everything. When I read things that seem so out of whack or out of proportion or just plain unbelievable, my first assumption is that I didn't read it correctly or misunderstood somehow.

If that is the case with the following, please correct me. I value comments and would love to think I misunderstood this.

This article dealt with agreements by the major U.S. auto companies with their unions, specifically "Job Banks" or, the fancy name "Guaranteed Employment Numbers" (GEN). I had never heard either term before. I read with interest because I was curious how it worked. As I understand it, if an employee is laid off from Ford, GM,, that employee first collects unemployment from the State and is then placed into a job bank in which that employee collects his entire paycheck, including benefits, in return for doing some work in the plant that isn't his regular job.

I interpret this to mean that the employee will get laid off, collect from the State, and then return to work at his regular salary (likely higher than mine and many of my friends), get benefits (likely better than any I have ever seen), all while doing something other than his regular job - which the article points out may be either doing crossword puzzles in the breakroom or jobs on the plant floor - but it is unclear what those jobs may be.

I continued reading trying to get a grasp of what the pros and cons of this situation may be beyond what pros and cons I had already formulated in my mind. The employees would rather be working. I am sure. I will give every employee the benefit of the doubt. If given a choice, I would rather be gainfully employed, making my salary, doing what I was hired to do - being paid fairly for that job. The pro being that the employee is there should a recall happen. You already have employees who know the job so training and training costs would be minimal to non-existent.

That's the only pro I see. Please help me here if there is something I missed.

Cons. Many. What incentive do employees have to do anything but sit in the job bank? It wasn't clear to me how long they are able to stay in the bank, but it looked like an indefinite program. Again, correct me if I am wrong. While I just said that I would love to be gainfully employed, how tempting is it to get my full salary and benefits while doing crosswords in the breakroom?

Do layoffs cost the company less? It doesn't sound like it. Perhaps I am not understanding the economics of the situation. But if I was paying Employee X to work and then laid Employee X off, but continued to pay Employee X to do a minimal job at the same salary - where is the benefit to the company?

Which leads me to ask - who the hell negotiated these contracts with the union? It seems to me that many unions were able to completely sideswipe management. Perhaps it's because at the time the contracts were negotiated, things were good. Automakers were making money - lots of it. They could not have anticipated - or didn't want to anticipate - not making millions or billions of dollars. So why not toss the employees a bone - we likely won't ever have to use a program like that. And the unions are going to take everything they can get - why not?

How shortsighted management seems to be - and unions for that matter. I try to teach that you always need to think of consequences no matter how unlikely they seem at the time. History has a funny way of repeating itself. Things are cyclic. That's how it works. You may think things are so good now, how would we ever need a program like this, but look. Unions need to take some responsibility also. I agree that unions want to do whatever possible to protect employees - their constituents - but how much of this may be attributed to greed? Am I saying this program is the reason auto companies are failing? No. Not entirely. But it is one more piece to the world's most difficult puzzle. Are the U.S. companies failing because the engineering and technology is better in foreign cars? I don't think so. I think we have incredibly talented employees from all walks - including management and union members. I think the engineering and technology of foreign management models is what is killing the U.S. automakers.


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