When people depend on subsistence agriculture for survival, as was common historically and sadly remains so in some parts of the world, the prospect of starving to death is never far away. Forces beyond anyone's control can ruin the year's crop and, well, there is no safety net. When the crops fail, no one eats. This puts people in a desperate situation. Do they roll the dice on being able to survive (somehow) until the next spring or do they devastate their prospects for long-term survival in order to make it through the day? Starving people inevitably mortgage the future. They kill the draft animals, giving themselves something to eat tomorrow but no way to plow the fields in the spring. It doesn't make sense, but people get to a point at which the future ceases to be a meaningful concept. There is no future. There is one objective: make it through today. Nothing else even enters the picture. Not coincidentally, the human body reacts to starvation the exact same way, digesting its own muscles to stay alive for a few more days.
While the nation and Congress were suitably distracted by the financial stimulus legislation, General Motors rapidly accelerated the process of digesting itself. Americans are numb to the loss of manufacturing jobs at this point – every day, another 10 or 15 thousand jobs. For GM the loss of blue collar workers is seen as survivable, even prudent, because labor can be replaced by machinery or Brazilians. Now they are slicing 10,000 salaried "white collar" jobs and demanding a 10% paycut for those who remain. These are the engineers who design their cars and the money people who are supposed to be devising some miraculous plan to save them. Sure, it may be only 10,000 people (pretend that's not a lot) but the ~60,000 who remain are now looking over their shoulders, waiting to be cherry-picked by the foreign automakers, and assuming that insolvency and door-shuttering are coming any minute.
Here's what baffles me: does the auto industry (never forget that Chrysler and Ford are little better off than the General) actually think this is a good strategy? That they can "cost cut" their way to viability and financial strength? Or, conversely, are these simply the actions of a desperate and starving group of people whose time horizons no longer extend beyond the current day? Given how clueless they've been for fifty years I fear that the company really believes that if they chop enough salary they'll start making money again. Why should we expect that they'd stop being dumb now?
Whether we're talking about GM, your employer, or the entire nation, the absolute worst thing to do in a situation like this is mortgage the future. To stop spending on education, training, product development, advertising (which GM has already gutted), and infrastructure is counterproductive at best. It offers next to no benefits in the short term (how much will trimming a bit of payroll really help a company so far underwater?) while crippling the odds of things getting any better in the future. More importantly, how will the industry be able to continue asking for bailout funds? In other words, what exactly is Congress bailing out at this point? The blue collar jobs are largely gone. If the white collar jobs are going to follow them down the drain, well…to quote the great Supreme Court Justice Louis Brandeis, "What the fuck, man?"
This is looking more and more like a death watch. Now that the stimulus has been passed it won't be long before the Little Three visit Washington again. Unless Congress writes a blank check, GM might not last the month.
kulkuri says:
I have no problem with GM cutting out the deadwood from the white collar (overhead) workers. Before it has always been get rid of those who put together the product while the paper-pushers sit at their desks and continue to push paper. I never could figure out the wisdom of getting rid of those that make the product while keeping the overhead high. Even if you are no longer making a product, keeping the overhead in place doesn't make any sense. I think they should start at the top and fire everyone until they get to someone who knows what they are doing. That would probably be down on the line!!
Sharper says:
If memory serves, Scott McNealy of Sun Microsystems steadfastly refused to downsize and consistently tried to increase R&D spending during lean times.
Funny you should refer to GM, et al, with the term "death watch", though; that's what auto blog thetruthaboutcars.com has called their many-years-running series of insightful editorials on the Detroit automakers.
Nate says:
I totally thought that you were going to write about a deathmatch between Todd McShay and Mel Kiper by your subject line.
Ed says:
K, the problem is that these people are not getting fired because they are deadwood. They're being fired because the company can't afford to pay their salaries anymore.
Barry says:
About two years ago, a friend at Visteon said that he had counted 8 layoffs since the spinoff from Ford (more recently, he said that he had lost count).
One of his comments was that, after 8 layoffs, "All of the duds are long since gone; anybody you'd like to get rid of is long since gone. You're getting rid of nothing but good people.".
Lee Iococca (sp?) said that, after 6 months or a year at Chrysler, when he had a minute to think of anything beyond today, he asked to meet with the new product development people. He wanted to see what new vehicles were in the pipeline, which would have been from 3-5 years long at that time. He was told that Chrysler had *gotten rid of* that group – there was *no* new product pipeline.
Now, then they could take the minivan concept, which Ford had developed (but never implemented), and roll that out. But now, I have a feeling that raiding Toyota will be much harder.
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