It's about jobs

November 10, 2009
By: Tim Heston

It's now one in 10, probably more. Take a walk and glance around. You'll probably see someone in need of a job. Within two blocks of my house, I know four who are unemployed—and those are just the neighbors I know.

The Labor Department's release, which pegged October's unemployment rate at 10.2 percent, caught many off guard Friday. Most thought the rate would reach that point someday, but not so soon. During the past year, durable goods manufacturing unemployment more than doubled, from 5.9 percent to 12.9, the highest rate of any sector the labor department tracks.

Break it down a bit more and the picture doesn't look quite as dire. In September 2008 the fabricated metal products sector employed 1.280 million; in October 2009 it was 1.275. And get this: Employment related to motor vehicles and parts actually increased by more than 4 percent. Could the sector finally be bouncing back?

I know I'm hunting for diamonds in the rough here. Heck, I'd be pleased with cubic zirconium at this point.

Regarding the jobs report, even Chris Rupkey, economist with the Bank of Tokyo-Mitsubishi, couldn't find a silver lining. Just days ago, in response to the Institute for Supply Management's upbeat report on manufacturing, he told the Associated Press that "the economic outlook is brightening & Manufacturing is in the driving seat at this stage of the recovery." On Friday, just hours after the jobs report came out, he told the AP that the employment numbers were "a kick in the stomach & The last two recoveries from recession in the '90s and 2001 were jobless, and this one is headed down the same road."

Bad job reports always affect me. After all, what else is the economy but a collection of jobs to pay us wages that put roofs over our head and financially support our loved ones?

Then, driving my daughter Kate to daycare, I heard this: "Once you have a highly skilled work force, the last thing you want to do is lay them off. This isn't altruism. It's good business." It was Dick Couch, founder of plasma torch maker Hypertherm, talking to a National Public Radio reporter.

It was one of the most profound statements I've heard from a business executive. On its surface, the statement seems idealistic, but underneath are shades of pragmatism. If people are truly your greatest resource, are highly skilled and hard to replace, laying them off would be the last thing you want to do. It's a central tenet to lean manufacturing: Productive, smart people make a productive, smart business.

Hypertherm's business dropped 50 percent this year and, according to the story, it has laid off no one. The reporter also talked to Lincoln Electric's CEO John Stropki, who didn't sugarcoat the strategy."This doesn't come without additional pressures and challenges for management, and I would say, equally, it doesn't come without additional pressures and challenges for the work force."

The NPR story explained the give-and-take of these no-layoff environments. They make the most sense for highly skilled work forces. And as Stropki said, a no-layoff policy is not altruism. Such a company trains and expects a lot of value from employees, who think on their feet to find better ways to conduct business. Also, employee pay rises and falls with business profitability. For many, that would be a tough pill to swallow. It calls for us to save when times are good so we can deal with reduced pay when times are bad. (Of course, some would argue that"s better than no pay at all.)

At Lincoln Electric, employees now work fewer hours, according to the recent story and the announcement Lincoln made earlier this year, which stated that the work hour reductions and related measures basically amounted to the financial equivalent to a 10-percent work force reduction. The company also used a voluntary separation program and carried out layoffs of contractors and temporary workers. But according to the announcement, the company's guaranteed employment policy (applicable to permanent employees who meet performance standards and have three years of continuous service) stays intact.

That's heartening news. No-layoff policies aren't perfect (reduced work hours/pay aren't fun, for instance), but it does put teeth behind the phrase, "people are our greatest asset."

I for one respect any business leader who attempts it—and I'm glad a few of these leaders are tied so closely to the metal fabrication industry.

Tim Heston

Tim Heston

Senior Editor
FMA Communications Inc.
2135 Point Blvd
Elgin, IL 60123
Phone: 815-381-1314