The Human Costs of Layoffs

            The layoff of workers from their jobs has been a common practice since the early days of industry in the United States.  It is one of the strategies used by employers who want to cut expenses when their company’s revenues are threatened.  In some industries such as construction, layoffs may be seasonal. For example, workers in cold climates expect to be laid off when winter arrives and called back in the spring. Some companies use layoffs as a means of eliminating undesirable employees. In these cases, there is no intention of calling back the employee.  In manufacturing, layoffs are typically the result of financial considerations.  In almost all cases within the auto industry, layoffs are often exercised arbitrarily, with little notice to employees or their union. The duration of the layoff is often unknown, and employees are not given a date when they can return to their jobs. 


When labor is perceived as a variable expense, it is one of the first cuts made when there is a perceived need to cut expenses. In general, companies have shown little concern for how the laid-off employees will be able to sustain their normal lives without a regular source of income.  Government-controlled unemployment insurance may be helpful in the short run, but these benefits are not designed to replace earned income and tend to be short term.


In looking at the history of layoffs at the GM Tonawanda Engine Plant, there were many occasions when layoffs were exercised, but there was one that merits further scrutiny. This is due to its length and its devastating effects on the laid-off workers. It occurred during a five-year span in the late 1970s and early 1980, and was caused by a severe downturn in the national economy, which had a major impact on car sales. Twenty-five-hundred workers were laid off.  GM employees on layoff had a difficult time finding work in a bad economy. This difficulty was compounded by the belief by many employers that GM workers will usually go back to their GM jobs when the economy improves enough for a recall.


That layoff came to an end when the plant was awarded a contract to build two new engines for new car models that were coming to the market. The plant recalled 30 workers at a time as the need for the new engines demanded.  On the day they returned, workers were invited by the plant manager to a breakfast meeting and a discussion of the plans for the future of the plant.  Management also wanted them to have a chance to get reacquainted with their job responsibilities to soften the impact of suddenly being on the job again. As part of their reorientation, management encouraged workers to talk about how they had survived being out of work for 5 years. Their stories were memorable and heartbreaking. Some had found temporary jobs that paid very little but at least kept them busy while waiting to return to the plant. Others told of major impacts on their families. They could not afford to keep their homes and cars in some cases. They could not promise their children that they could look forward to college after high school. Then there were the families that broke up because of the financial stress, and that brought tears to their eyes when they spoke of it. As is often the case under the severe stress that usually accompanies job loss, it is not unusual that the employee would fall into a serious case of depression.


At the end of the first of several of these meetings, Don Rust, the plant manager at the time, decided to make a promise to the workers—a promise that he had no idea whether he could keep.  He stated to each group of returning workers that, as long as he was their plant manager, they would not be laid off again. In essence, Don was offering them job security. He knew that this set a precedent in GM and its affiliates that he may not be able to back up.  He also realized that his bosses at GM would probably fire him if they became aware of what he was promising his returning workers.


There were times in the next 15 years when the plant could have had a layoff, but it had planned for that event if the time came. It did come, but this forward planning provided a variety of different non-production jobs for any worker whose job might be jeopardized. Some were offered jobs that improved product quality. Others were offered jobs that improved safety, housekeeping, machine maintenance, and even opportunities in the community or at GM dealerships. It worked.  And, when business improved, workers went back to their production jobs.


Valuable lessons were learned from this experience. It was indelibly etched in Don’s memory for the future.  He never wanted to forget that his plant’s workers are vulnerable to personal crises when they are laid off.  He saw firsthand that job security was a major concern for these workers, and knowing that management had instituted strategies to minimize layoffs was reciprocated by an energized and committed workforce. Not long after, these same workers set a world record for engines produced in one day at their plant. This record stands today and is a testament to how creating a culture built on faith, trust, and respect for each worker pays dividends for both workers and management. Write your blog here.