I suppose I risk being lumped in the "socialist" category when I say I'm all behind this idea of Kurzarbeit, whether it's following the German's lead or just applying some basic common sense. My husband owns a small business and a couple of years ago when things got tight, he put into play a similar practice and had all existing employees go to an abbreviated work week obvioulsy with a reduced pay scale. Difficult for all, but better than seeing some of their trusted colleagues hit the chopping block. When business improved, the hours were reinstated and the team moved on from there.
I would hope in this day and age of economic and job uncertainly, employees would value this philosophy and make it their goal to be as productive and loyal as possible. Then it can be a win-win for both sides.
Employees have a right to view this concept with a bit of skepticism; the concept is almost unheard of in this country. Labor is one of the highest costs to a business; axing people when times get tight is the easiest, if not smartest, thing to do to maintain that bottom line.
Workers would seem to be just another commodity, managers can always get more.
One way companies might improve their image is to not seek H-1B visa workers any more. This concept (training during slow times) is an honest approach, H-1B is not.
The concept proposed would be a breath of fresh air.
The H-1B issue is a separate can of worms in this debate. While I understand that we don't want to lose engineers trained in the U.S. at great expense, I still find it very hard to believe that employers can't find at least some of the same skills within the existing U.S. workforce.
Great example, Beth. I have recently heard stories about fewer workers leaving their jobs because they know how tough the job market has become. One report called them "disgruntled" workers, read: unproductive. It seems to be any business owner worth his/her salt can determine whether or not to keep a productive worker in good times and bad.
Many years ago I worked at a Magna company. Overtime was a given - the 'regular' work week was 44 hours, 40 regular and 4 overtime. When business was slow, hours were cut back to 40 - no overtime. When business was bad, hours were cut to 36 - 4 of 9 hour days. The other employees that I worked with claimed to prefer the across-the-board hours reduction to lay-offs. I definitely preferred a 4-day work-week / 3-day weekend, even at reduced pay, to being laid-off.
The boss knowing which employees are worth their salt is a myth. I have worked with several technicians that were barely competent, but had convinced the manager that they were the best thing since sliced bread. More than once I have been blind-sided by a manager citing criticism of my work by a new technician whose screw-ups I had had to clean up after. Even after the new tech had been found-out and fired, the stain on my record remained. Yes, it is like sour grapes; I haven't mastered the skill of BS'ing the boss.
I tried to do something like this at a previous job. I had an extremely highly skilled technician who I had been training to take on more and more responsibility. Unfortunately, he also had the least amount of seniority, so when it came time to make layoffs, he was the first on the list. It seemed to like a bad idea to lay him off after investing so much time in training him, so I thought perhaps I could work out some kind of Kurzarbeit scheme. This was a mistake. Upper management thought I was being soft-hearted, and the union thought I was trying to screw them. In the end, I had to lay him off. As I had suspected, by the time the company started recalling laid-off workers, he had found another, better job.
I like the first part where you cut hrs instead of laying off simply because for no other reason is good workers are hard to find and expensive to train. Giving workers job stability with decent pay means you'll get their best especially if they get a piece of the action.
The other side is when business is good they can work overtime so you don't have to add more that later likely have to fire as demand drops as does every 3-5 yrs on average in the US.
The second part is how unions, guilds, etc keep people out, not really to teach them. Just start new ones on the drone work and let them advance as they learn.
I'm about to start 6 or more new business' and employees are the biggest problem. Finding good ones is expensive and pays to keep them around. If you have good employees and not enough work, find more work in other areas or upgrading, etc.
I know of 10 different business in RE, EV's, transportation that can be started cheap and make good money. Have a few so if times get bad, you have alt work to keep your workers or you'll pay the price like many now as demand ramps back up.
During a recession in the 1970s, Hewlett-Packard cut the employee work week and pay by 10% to save jobs. When the economy improved, the work week and pay were restored to 100%. It worked for HP; most employees preferred to "tighten their belts" and keep their jobs.
There is one trusim that I have never found not to apply: Management always does what is easy. There are probably a hundred different things that management can do when business begins to fall off, the easiest one is the layoff. It doesn't really take a lot of effort for a layoff, in fact, most of the time I've detected a randomness to the selections as if management took no time to discover who contributes. Generally the pattern is who makes the most money or who's the oldest.
Given past experience, this German method is way past the intelligence level of US management. It's way too much effort.
True, but not in such a destructive way as management. When we do our processes that create the product, we try to make things as simple as possible but we don't compromise performance. We examine the impact of our changes, I've rarely seen management do that. I cannot count the number of times I've heard "We'll monitor the situation" or "We'll see what happens." After that point, action is never taken.
And I think layoffs in Germany are not nearly as easy as they are in the U.S., thus some incentive to find a less painful (to mamangement) way to reduce expenses in troubled times. German companies are not necessarily altruistic.
I don't think the Germans operate their system on the basis of altruism; they do it on the basis of a long-term plan, within their specific environment- it may not work in other environments. It takes years to train up workers in any skilled industry; this time is often longer than the recession lasts, so it can be best to keep hold of people ready for the good times. This is the opposite to the short-termism practices in the UK and, it appears, in the US, where our boom-busts have been worse, and it's only been through Japanese Companies-in the low-skilled motor industry- and small management owned companies (and there for different reasons) that we in the UK have seen more of this keeping workers on on short weeks. The problem is that circumstances change so much during these widely separate economic cycles that it's difficult to say that operation X in situation Y works, because the whole "situation Y" never really recurs, and so macroeconomics remains largely a matter of opinion, dominated by socialist economists, since capitalists tend to actually go out and make the money and in the words of one socialist economist, that most economists are socialists, because socialism makes more challenges for economists. A truism in the Uk is that a Labour (Socialist)government will always leave us in a recession, but that's about it.
Where was I ? So, I think Companies do what they do for what they perceive as their benefit within their environment, and since Germany will in the next few years, dominate a Federation of 27 (?) no longer independent Countries, with a total population way bigger than the US, it would be a brave or arrogant individual to say he had a better idea.
I agree, German companies are not operating on the basis of altruism. They are trying to preserve their investment in skilled workers and are thinking longer term that many U.S. companies.
One criticism of U.S. manufacturers is their relative inability to quickly scale up when a new market emerges or an existing market heats up. The Apple iPhone glass-cutting operation run by Foxconn is a prime example. Apple said it couldn't find a U.S. company able to produce iPhone glass touchscreens in the amount of time Steve Jobs said he needed them, so Apple went with Foxconn. U.S. manufacturers need to become more flexible in order to compete in high-tech manufacturing.
Yes, George, I understand what you mean about the inflexibility of U.S. manufacturing at some stages of its history. But it seems to me, U.S. resilience always swings back. We get stuck in our ways during long periods of relative prosperity. When we hit a good sharp recession, we always seem to rally. I think we're in a rebirth of manufacturing now. We very well may have the most efficient manufacturing base now. Certainly a lot of automation suppliers have been saying so lately.
TJ, I agree with you on this one. While the concept seems to have appealing aspects, it could add to an underlying resentment among some workers. The drive to achieving productivity and excellence is also not completely linked to time worked.
As you say, George, there will be those who will say see a German socialistic flare in these policies, but I don't see it that way. Seems to me it's just good business to find a way to keep productive employees when times are tough. More good minds translate to better product design.
I agree, Chuck. It's good business from the standpoint as others have suggested here that finding and training good talent is difficult even in these times of high unemployment. The other things that really makes sense is that workers feel a sense of value and loyalty from their employers, which has to translate in more dedicated and productive workers. It's hard to muster up your best work when you feel your job could be eliminated at any time.
It is good business to keep your trained and experienced employees around, but envision this scenario. The engineers at the company are retained and given a cut from 40 paid hours to 35 paid hours. Now, of course, the business climate improves. Now said engineers must work 50-60-70 hours to get the product out the door. However, since overtime is unpaid, it's a win for the company! Now, they don't have to boost their paid hours back up to 40, just make them work more unpaid overtime to 'keep' their jobs. And don't think that most companies won't do this. It's like waving free money in their faces.
There have been some amazing stories in US manufacturing in recent history. Take for example the Polartec story. In an old mill town in Massachusetts Malden Mills manufactured the finest fleece textile fabric in the world.
In 1995 Malden Mills suffered a catastrophic fire and burned to the ground. The company, however, continued to pay all of its employees their full salaries!
Polartec survives although not without having gone through several bankrupsies due to the cost of rebuilding, the economic climate and global competition.
A company that keeps key people is ahead of the game no matter how they are kept. I have been thru a few of those reduced work week times. The company I work for has, when work picked up, reimbursed us for the time missed. I didn't mind much because both those actions gives me a warm & fuzzy feeling about the company & it's future.
Intelectual property is priceless & because of that I have been here for 28 years .....& I like work. Patting myself on the back now.
As for Polartec, I prefer it's product over all other fleeces, it is stil superior & I believe it's because of the companies actions
Spears Games (UK) is another example. The founders sold the company and retired. When the new owners starting closing plants and laying off workers, the Spears family bought the company back and brought back all of the workers.
Europe has had a system of codetermination, where a company's workforce holds one or more seats on the board of directors. So it's not completely unusual to see the concpet of Kurzarbeit come up.
However, it's not as rosy as some may think. France reduced the national work week 10 or so years ago, in an effort to cut their unemployment. The result? Pay went down to 35 hours equivalent. The number of employed did not go up materially, and professional workers were expected to work the full 40 hours, unofficially, and to do exactly the same work they had before, but for less pay.
Why Germany would think their experience will be any different I don't know.
Particularly when you consider that engineers tend to be more focussed on the work than the clock, I would expect to see little shift, except among blue collar workers.
So they may call it Kurzarbeit. What they mean is Kurzbezahlung.
This isn't a new idea! My grandfather went through this during the Depression. The airplane factory in Ohio put the workers on 25 hour (3 day) work weeks to keep all of their employees. Some moved, some left for other jobs, but no employees were fired or laid off. My grandfather got a job with NCR and stayed 33 years until retirement. The airplane factory asked if he wanted to come back more than once, but the NCR deal was too good to leave.
HP and Agilent have used this method more than once. It did not generate resentment, to the contrary, it built a team spirit that said we were all in this together. It does work for short term or small increments of reduction but if the reduction numbers were 20-25% or higher, you would not only get resentment, you would have a lot of folks quitting or retiring.
The team spirit that was created was later lost when we found out that certain high-level managers received raises and/or bonuses during the period we were "all sharing the pain". That caused resentment.
I don't think this approach resonates with American culture. As well, with the meme of U.S. manufacturing on the rise (or, we want it to rise; more investment so the U.S. remains competitive), I think what we want to do is use tax incentives and reduced regulation to encourage hiring, rather than to enable cutting of hours.
My brother works in the shop for a high-end cabinet maker supplying to buildings such as new or remodeled restaurants, hotels, hospitals, schools, etc.When things got slow due to the economy, employees started getting furlough days off without pay.A day or two per month was not big deal, but sometimes getting three or four furlough days a week made it very tough on his family finances.As a result, the company retained most of its skilled shop workers.
I seem to recall the most engineering and manufacturing companies in Germany are unionized.I worked with a German company during the 1990's that was doing the same sort of products as my job (company), visited them for a week in Germany.The union agreement called for a set number of employees for the agreement's term, and employees couldn't just be fired or laid-off.
And I think in today's engineering world I hear more complaints about having to work too long. I think there would be a significant number of my counterparts out there that would love to stop working after 8 or 9 hours rather than the 10 or 12 a day that are expected now.
Don't get me wrong, Germans have very admirable qualities.
Their ineptitude at corruption compared to their Latin neighbors stands out amongst these; however, in general Germany has more to learn from America than we do from them.They have an excellent technical apprenticeship program.We did too, and we pretty much destroyed it.We need to rebuild that.Captains of industry whine continuously about the incompetent product released by America's educational system.Then proceed to do nothing about.By "do" I mean spend money, mostly.The David Packards and such 'used' to get involved in supporting education, no longer.
Now, in terms of immolating German or any other country in terms of labor policy, I would say forget it.Capitalism can be cruel, but as Churchill said of democracy, "it is a horrible system and only has one thing in its favor no one has or will be able to come up with a better system."Of course I paraphrase but that was the jist of it.It is too bad that time after time people waste time, resources, and even lives trying fruitlessly to find that better system.The Germans are perfect examples of this. Their recent history stands as a stark reminder of the fallacy of this pursuit.
So long as Americans think their's is the best system in the world and that there are no lessons to be learned from others, the US will continue to treat it's workers as if they were toilet brushes. Mitt Romney's "I like firing people" pretty well sums it up.
Americans clearly are happy with their system and it's results otherwise they would make changes. Dogma, mindless labels such as "European Socialism" and fantasy rule rather than pragmatism and socially desirable results. As Einstein famously quoted "to keep doing the same things over and over and expecting different results, is just crazy". Need I say more?
As usual, Einstein is correct. We can't compete globally in manufacturing if we keep doing things the same way. The problem is moving beyond the campaign rhetoric and coming up with a strategy, a policy, whatever you care to call it, to revive our manufacturing base.
Comment #1: The technique of using furlough's rather than layoff's was practiced by HP way back in the day (and may still be). I always thought it made a lot of sense and, from the standpoint of a working guy who sweated making the paycheck stretch to keep the family going, I would certainly have preferred it to the always dreaded layoff.
But, in today's world, companies use layoff's as a convenient tool for 'right sizing' and for getting rid of dead wood. I remember working at Allied Signal back in the late 90's and early 2000's (prior to the merger with Honeywell) and I swear we had layoff's every 3 months! Now that, guys, would rattle anyone!
Bottom line: yes, I would prefer to have furlough's. As a manager, I would prefer it also although it makes the work flow more difficult. As an owner, I certainly would prefer it as it leaves me with a lot of flexibility.
Of course, if the furlough's got too deep (i.e. too many days off per week) then some more drastic measure's might have to be taken.
In the end I wonder if American upper management will be able to ever view beyond the the 50 cents they stop and pick up and step over to the dollars hey could be saving in the long term. Furloughs and asking people to work less for a little less money is a great way to keep the intelligence of the company around. Let's face it quite often the guy you let go this week is the only one that knew how to fix that next problem that comes up.
Well put, JMILLER: Lost is the motivation and fresh attitude that you lose when you lose people that fill important roles in an organization. When you force people to work too many hours and/or pick up slack for laid-off employees, you create an environment that will become stagnant and filled with lack of creativity and motivation. You lose all you have paid for up to the point you let someone go, and will be forced to spend a lot of time, money and effort to get your business back to previous levels. The Germans have something here, you streamline, but foster creativity without losing talent. It is greed that drives lay-offs in a slack economy, too often those that make the most, are not willing to sacrifice, but they have no problem sacrificing their employees time and livelihood. Everyone needs to suck it up during a slack economy, not just those at the bottom. By keeping people working (even at lower salaries), the economy won't take a nose-dive, but will slowly work its way back.
I think more than greed it is short sightedness that drives looking at the black for each and every quarter rather than accepting that a red quarter now may result in some great quarters in the future.
The workweek reduction is certainly a much more merciful means of cutting labor expenses, and if the managers believe that an experienced workforce is a valuable asset, it is the only reasonable approach. But my previous employer, Methode, a German parented firm, had a much different attitude: "We will lay off a lot of people, including engineers, and then if we find we need more we will jsy hire more", and the rest of the comments asserted that they believed that all engineers were interchangeable, like lockwashers or accountants. But one other employer, many years back, did do the workweek reduction, which was good. MY solution to the loss of income was to take on another job one day a week, at another company. Eventually that company offered me a lot more than the full pay from the four-day employer, so I changed jobs. The 30% increase was an attention getter, no doubt.
I do not know just what business Methode is in presently, but I hyave seen a lot of those co-workers listed on Linkedin as being employed elsewhere. MY guess is that it is possible to demoralize a staff through repeated layoffs, to the point that all those who can leave do leave. The guilty parties know who they are.
I question the whole idea of viewing loyalty (to & from business enterprises at least) as a virtue.
Loyalty, to me, means "inertia". It means you were probably happy being comfortable instead of challenged.
Why should we worker bees seek that? Why should companies reward it?
Employees would be better served by being a little closer to vagabonds (instead of "bedrocks of the community"): moving around more among companies (including different cities), not letting them take us for granted, getting them to compete for us, etc.,
Employers, too, would be better served by a workforce that has seen a greater breadth of industry & hasn't settled into the paternalistic view that the company is there to care & nurture them.
Of course, this advice also requires a whole re-thinking of the importance of family, that family's mobility, whether buying a big box-of-boxes (house) is ever really in your best interest, and just what's so good about "putting down roots" . . . . . but that's beyond the scope of this topic, as is the requisite mobility of pensions & healthcare.
Loyalty does not equal inertia. This is not just about employment security, but rather about mutual commitment to each others' success. I'm not sure loyalty is even the right word for what we're talking about, but it may not far off.
Early in my career, I worked for a company with very high performance standards, but also a 100+ year culture of developing employees and trying hard to retain those who met those standards for a full career. They promote from within - no hired guns in senior management. There were staffing reductions occasionally, but one had the sense that the company was committed to one's success, and I thnk most employees felt committed to the success of the company. I know that I and others did things beyond the requirements of the current pay period. One weekend, a group of us worked together to get a prototype product together to show to our director the following Monday - not because of a deadline imposed by the director, but because we thought it was important. Getting the job done included our going over to the home of one our technicians and providing childcare for her, so she could work on some key components of the prototype. We were working for a common cause, not just the paycheck. I had other experiences like that, wherein we saw what we believed was important objective and worked long and hard to achieve it - as a team, not due to some externally imposed mandate. Policies of maintaining and developing employees in both good and bad times contribute to this kind of culture, as do benefits tied to longevity (pensions and other retiree benefits).
As a result of divestiture, I no longer work for that company. What I've seen in business more recently is a trend toward what I call transactional employment. By this I mean that an employer's total obligation to the employee is pretty much settled with each paycheck. Defined contribution retirement plans (mostly 401(k)) and the elimination of many other retiree benefits make it harder and harder to differentiate between employee and contractor. There are few benefits of 'membership' in the organization. That kind of culture does not engender loyalty or incent employees to go beyond the specific job requirements for the day.
We became bloated and without compromise. The auto industry is one very prevalent example. Too big to fail will fail. The industry will need and sooner then we may believe more tax money infusion. The Government stepped in and has ruined investors actual bond holders to give the companies to the unions and foreign invertors. They still owe the tax payer and the tax payer will never recoup from the Government deals. GM had to pull their commercials as it was clear that what they tried to report was not true. They did not pay back their loans in full. As the fuel cries raises it ugly head yet once again vehicle sale will plummet. Big tick items will not sell and folks will pull back their purchasing causing yet another recession on top of the one we really are not out of by a long shot. Bailouts are a Government stop gap that will not work as we will see in not to distant future as the worldly lenders will come a calling as they have in the EU. Obama will go on with his Keynesian economy of band aids and he will be shamed into submission at some point as the country goes into his planed world economic equality recourse. There will be few companies hanging on that will be hoping to save their precious few employees in hopes for a rekindle. Even Germany will find the unsustainable limits as no one will afford the fruits of their labors.
At this year's MD&M West show, lots of material suppliers are talking about new formulations for wearables and things that stick to the skin, whether it's adhesives, wound dressings, skin patches and other drug delivery devices, or medical electronics.
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