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Chrysler announced last that it was firing 13,000 workers and completely shutting down one of its SUV plants in Newark, Delaware. The job cuts represent a 16 percent reduction of Chrysler's production workforce, and about 5,300 of the 13,000 jobs to be cut will be in Michigan.
It has become a tragic comedy to watch one U.S. automaker after another resort to massive layoffs as a "rescue plan." Until recently Chrysler looked like the success story among Detroit's Big Three automakers. Perhaps shedding workers would be more understandable if Chrysler and its American competitors were offering a truly innovative re-design of their business model. Without a doubt, U.S. automakers are saddled with legacy labor agreements that burden their cost structure. But year after year nothing seems to change, and it's the blue-collar worker who must pay the price for a lack of vision in the executive office.
Don't you wonder what is really going on in senior management levels at the major U.S. automakers? Surely they don't see that slashing labor costs to be a real fix to their broken engines. Ken McCarter, DaimlerChrysler vice president of labor relations, said in a statement that the package allows the company "to become more productive and thus more competitive...." I don't think anyone really buys that spin. Bottom line, U.S. automakers are failing to meet consumer demands for style, reliability, and fuel-efficiency. Ultimately, all the cost-cutting in the world cannot hide the absence of innovation.
Alan Downs once was a corporate manager responsible for enacting sizeable layoffs – he relates being in a strategy room at AT&T where the fate of employees was decided by moving their photos around on a panel board. But he eventually soured on its benefits to a company’s performance. He points out four myths that prop up its credibility among managers all the same:
Myth #1:
Downsized companies are leaner
Myth #2:
Layoffs increase productivity
Myth #3:
New, better jobs are being created
Myth #4:
Downsizing increases profits
To satisfy his curiosity, Downs did a careful analysis of business operations at major corporations - before and after massive downsizing occurred, Although nearly a decade has passed since Down's wrote up his conclusions in a book called Corporate Executions, the consequences of massive layoffs inside a corporation have not changed: a broken trail of communication, stalled productivity, and battered morale.
Major layoffs usually signal a company mired in a without a plan. While re-adjustments in the labor force certainly arise from time to time, once they become a pattern it becomes the sure sign of a sinking ship.
Funny, I don't recall reading about massive layoffs at Toyota.
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