Job Banks Are Too Small to Save?
Q: Have the UAW “Jobs Bank” and other job security measures prevented domestic auto companies from “rightsizing” their workforce?
A: No. As a result of decreasing market share, each of the domestic companies has sharply reduced its workforce. Five years ago, there were approximately 300,000 UAW members working at Chrysler, Ford and GM; today, that figure has been reduced by half, to fewer than 150,000.
The “Jobs Bank” concept was pioneered by Japanese auto companies, who have had a no layoff policy in place for many years. The policies currently in place at Honda and Toyota, which pay workers full salary for an indefinite period, are more generous than job security programs in UAW-negotiated contracts.
With 4,500 workers earning their full paychecks while its San Antonio truck plant was idle this summer, Toyota had more workers in its version of the “Jobs Bank” at a single plant than Chrysler, Ford and GM currently have in all of their factories put together.
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As the U.S. auto industry sheds workers, and even Nissan offers buyouts, Toyota is sticking by its proud—and expensive—tradition of no layoffs during hard times.
“This was the first chance we’ve really had to live out our values,” says Latondra Newton, general manager of Toyota’s Team Member Development Center in Erlanger, Ky. “We’re not just keeping people on the payroll because we’re nice. At the end of all this, our hope is that we’ll end up with a more skilled North American workforce.”…
It’s an expensive proposition. Toyota won’t estimate the financial hit. But keeping 4,500 of its workers on the clock at full pay and benefits for 14 weeks, even at a conservative estimate of $20 an hour, would represent at least $50 million. The shutdown also means a production loss of 30,000 to 40,000 big-ticket pickups and SUVs. At an estimated wholesale value of even $25,000 per vehicle, that translates into as much as $1 billion in lost revenue.
