When Recession Does Not Mean Layoffs

Good story on NPR’s “Morning Edition” this a.m. about manufacturers that eschew layoffs when the economy slows and orders fall, “Battered Company Says ‘No’ To Job Cuts.” The piece profiles the New Hampshire-based Hypertherm, a world leader in plasma-cutting tools.

Hypertherm saves money by doing everything in-house that it possibly can. Plus, it puts workers into training or assigns them to teams to rejigger the production line. The goal is to emerge from recession in a better position to compete.

Dick Couch, the company’s founder and chief executive officer, sees no tension between looking after the interests of employees and keeping the company afloat.

“Once you have a highly skilled workforce, the last thing you want to do is lay them off,” he says. “This isn’t altruism. It’s good business.”

Couch says that if he were making T-shirts, this strategy would fail. High-end products and experienced workers go hand in hand.

That’s right. The policy works for some companies and not for others, and is also dependent on management both the authority and flexibility that comes with good employer-employee relations to adopt this creative strategy. As a labor writer notes in the story, the unions don’t like this no-layoff approach.

The story also cites Lincoln Electric in Cleveland, a global manufacturer of welding systems.

Lincoln Electric CEO John Stropki says people considering this model need to go into it with their eyes wide open.

“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 workforce,” he says.

Stropki is on the board of directors of the National Association of Members.

UPDATE (9 a.m.): Hypertherm won the NAM’s Sandy Trowbridge Award in 2008 honoring the company for its numerous community activities and generosity. A great company all the way around.

Join the discussion One Comment

  • Frank Koller says:

    Good morning,
    My name is Frank Koller and I was the journalist quoted in Jon Greenburg’s item on NPR yesterday.
    A comment if I may:
    The reason why unions have been suspicious of no-layoff policies – much more so during the first 75 years of the last century – is quite understandable. In order to work for everyone’s benefit, these policies are based on a sense of trust throughout a company that sacrifices in hard times will be shared equally across the firm (for example in terms of lower compensation and/or reduced hours of work to avoid layoffs) – and of course, the same requirement for sharing equally needs to apply to the shared gains in good times.
    All too often, the rhetoric of sharing has tended to work one way only – labor shares the pain, management shares the gains – and so, in all too many cases, over the years, the distrust by workers (organized or not) towards no-layoff policies has been perfectly justified.
    In the cases of Lincoln Electric (in operation in Cleveland since 1895) and Hypertherm (in Hanover, New Hampshire since 1968), trust has simply become part of the corporate DNA of both firms and their workforces.
    It has taken these firms decades of committed leadership to nurture a widely-felt belief that indeed, over the long-term – “we are in this together and will as a result, ultimately, we will benefit together.” It’s not easy – but it is powerful business model. Layoffs are enshrined as the absolute last step to ensure firm survival, rather than just another tool in management’s quiver.

    My book about Lincoln Electric’s unique and very successful history with guaranteed employment – which includes a profile of Hypertherm, as well – is called SPARK and is due for publication by PublicAffairs in New York City on February 23, 2010.
    You can see more about the book at:
    http://www.frankkoller.com … and


    Frank Koller

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