While job losses keep mounting in today’s brutal economy, a growing number of companies are avoiding layoffs using a program known as work sharing.
Instead of laying off employees, companies are keeping them while reducing workers’ pay, often by 20 or 40 percent. The employees generally get to hold on to benefits as well. Then, state governments step in and make up part of the lost wages, usually about half. Seventeen states have adopted the program, and economists and executives are hailing the program as a way to keep workers employed and retain skilled labor. A similar work sharing program has been credited with saving thousands of jobs in Germany.
With savings from reduced income taxes and from commuting fewer days, some workers nearly break even. Unfortunately, only a small portion of eligible businesses and workers are presently benefiting from the program because most companies still don’t know it exists.
A story in the June 15 New York Times covered a Connecticut metal working plant utilizing the program. At Tri-Star Industries, the 29 nonmanagerial employees now work three- or four- day weeks. “The alternative would have been to lay off three to seven workers,” Andrew Nowakowski, president of Tri-Star Industries said, “but that would mean that when things become busier, I’d run the risk of not having the trained people I need.” The company’s employees have bought in to the program as well, even if it means less pay. “Without this, it would have been four or five guys out the door and one of them could have been me,” said John Drzata, who runs a five-spindle precision lathe.
Right now, business is all about staying in game; fighting to see another day. A shrewd combination of sacrifice and creativity such as work sharing is the way to survive.
/* php if ( comments_open() ) : ? */>
Comments Off on On the Way Up /*php endif; // comments_open() ?*/>
By Lloyd Graff
June 3rd, and the world looks a lot different than just 30 days ago. GM finally did the dirty deed and filed, and the stock market reacted with relief. It appears suppliers are going to get paid from the Feds lending as the reorganization goes forward. BorgWarner stock is up 80 percent from its low and Johnson Controls has also bumped. All of the commodities are zooming with copper near $2.30 and ArcelorMittal stock more than double from its yearly low. Obviously, the markets are signaling a bottoming of the economy. One of the most encouraging aspects of what’s going on is the strength of the California home market. Sales have been improving for existing homes and the unsold overhang is shrinking. Home prices have actually been rising recently. California led us into the housing chaos and it appears to be leading us out. New homebuyers are appearing in Phoenix, Florida and Vegas where syndicates are coming in with speculative bids for cash on multiple units. In the real machining world we live in, the signs of a rebound are beginning to show. Hoff-Hilk’s Bystrom sale last week was a winner with Swiss CNC machines, and Gerry Mannion told me that his recent Bosch sale surprised big on the upside. On the other hand, Robert Levy of Hilco says that he remains very conservative after seeing the market for used twin grip Cincy centerless grinders grind to a halt. Presses and multi-spindle screw machines have no pulse right now, and gear equipment is languishing. Intrest rates are rising on 10 year U.S. government bonds, the dollar is weak, the big banks have floated $70 billion in stock and are begging to pay back the TARP. Huge money is leaving the sidelines for investments that appear to have upside. Put it all together and it smells like a recovery in the womb, if we can hang in there while inventories gradually rebuild.
Question: Do you feel more upbeat about business now that GM has finally filed?
/* php if ( comments_open() ) : ? */>
Comments Off on There is Life After Automotive /*php endif; // comments_open() ?*/>
By Lloyd Graff
Over a dozen years ago I developed a wonderful business relationship with Ed LeClair, who used to be operations manager at Curtis Screw Company LLC., of Buffalo N.Y., one of the largest precision machining companies in the U.S. Among Ed’s many responsibilities at Curtis was buying used machinery, which put us on the opposite sides of the table, but we developed a great rapport even while we were negotiating like pit bulls on the price of Schüttes and Acmes. It came as a shock when Ed told me he was leaving Curtis in 2007 to buy a printing shop franchise in Raleigh, North Carolina, which he planned to run with his wife Carol. I knew that Ed had long had the dream of going into business for himself because he had queried me periodically about what job shops were on the market. But Ed and Carol were entrenched in Buffalo, and I doubted he would put it all on the nose to buy a screw shop in Detroit or L.A. But one day he and his wife, a long time teacher, found themselves rattling around in their big house, their youngest child now off at college, looking for one more big challenge before retirement. It was the right moment; the print shop opportunity popped out of the weeds and they grabbed it. Mild Raleigh winters sounded good, and the thought of absorbing the pressure of running an automotive supplier had lost some of its appeal. Ed regretted leaving his good friend and colleague Paul Hojnacki, the general manager of Curtis Screw, and the tremendous team of professionals he and Paul had shepherded in Buffalo, but as it turned out his timing was impeccable. The auto market tanked and the stock market imploded, but Ed managed to escape from both calamities with his move to Raleigh, a place where he found relative stability in job shop printing and a community heavy in colleges and drug companies. He and Carol have now been working together for more than 500 days, definitely an experiment, but Ed says they still love each other. Ed is a thorough and charismatic operations guy and he brought the rigor of automotive land to the AlphaGraphics franchise he bought. Business is prospering. He called me to ask if I knew of a good sales person in North Carolina he could hire. He told me he stays in touch with Paul Hojnacki at Curtis, but he is happy to have fled the misery of the car industry. Ed LeClair is living proof that there is life after automotive. He says he’s just a lucky guy. He bought Ford stock in February and it has tripled. Lucky, maybe, but smart enough to live out his dream before life runs away.
Ed LeClair, former operations manager of Curtis Screw Company LLC., Buffalo N.Y.
/* php if ( comments_open() ) : ? */>
Comments Off on Inside the Swiss Screw Machine Industry /*php endif; // comments_open() ?*/>
Paul Huber of Comex comments on the recent Bosch auction in which 75 Escomatics were sold by Asset Sales Corporation. Paul came to the U.S. as a Tornos service engineer and is now the wise man of the Swiss screw machine industry.
The General Motors train is lumbering toward bankruptcy. Does it give you any comfort that Elmer Fudd in pinstripes, otherwise known as Fritz Henderson, is now running the show at GM? Henderson is another GM lifer who has been a successful bureaucrat politician at General Motors—not exactly a guy who looks like the next Lee Iacocca or Steve Jobs. What a mess the company has become. Alfred Sloan must be laughing or crying in his grave as he watches jokes like Rick Wagoner and Elmer Fudd, excuse me, Fritz Henderson, fumble toward bankruptcy. I felt like retching as I watched GM’s current TV advertising joke, “Put on your rally caps America. It’s time for a comeback.” The ad deftly admonishes the viewers. How incredibly corny and out of touch can you get? And then the announcer talks about the GM “total confidence” program. How can the people at GM and their ad agency think viewers are going to buy this kind of cynical condescending eyewash? But this is how GM got to where they are today. The company has become a joke, a Jay Leno one-liner, because the management continues to be laughable. The GM trucks and cars are not bad, but who wants “not bad” when you can buy Honda and Toyota for the same money and you know they’ll be around in five years? When GM guts the company, throws out the Elmer Fudds and talks to its customers as intelligent consumers, not stupid yahoos, I’ll consider buying a vehicle from them.
Also, don’t forget that today is your last chance to win the Gerstner toolbox and other prizes by posting on the TMW Shop Doc Forum! Join and post on the forum by going to www.shopdocforum.com.
At least three times per summer we hear the sirens blare, signaling the possibility of a tornado in our vicinity. We take cover in the basement or the safest corner and wait for it to pass over. We listen for the “all clear” signal and the absence of thunder.
For the machining industry, particularly in the Midwest, the tornado sirens keep shrieking and the all clear has yet to sound. Since September a lousy recession has become a depression worthy event for anybody who cuts or bends metal. The only hiding places have been in guns which are going nuts as people fret about an Obama weapons law, and medical which has held up partly because people shoot at each other occasionally. The big winner is still orthopedic implants which save the bodies of aging baby boomers.
The stock market has been signaling that the financial system is stabilizing. Houses are selling with the huge price drops and the inducements of low interest mortgages and assorted subsidies. The stimulus package, though diluted by transfer payment funding is going to kick in soon. The Fed has poured liquidity into the banking system and the corporate bond market has strengthened. Inventories are paltry in the bins and semiconductors, the guts of electronic tools are making a comeback.
It appears that the economy is beginning to get its legs back. Auction prices are in the toilet. Much of the equipment that goes to sale does not meet the reserves which ultimately depresses prices further. It seems like it cannot get worse and then it keeps getting worse in machining. We probably will get no clear bottoming signal. Some very sharp economists who know our world are predicting an uptown—next March.
Hang in there. Unfortunately I have no economic Doppler radar. It will get better, but we won’t hear any “all clear” horns go off.
Question: Do you think the tornado will ease up soon?