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You are the president of [car company]. You can increase efficiency by laying off 48,000 workers and automating their...

yllus

yllus

Elite Member & Lifer
I've outlined a basic sample business decision by, for the sake of this example, a car company.

The issue is simple: A fairly small increase in profits and the layoff of thousands, versus the continued employ of those people and smaller profit to the company.

You may assume that the layoff of those workers is not mandatory to the survival of the company - keeping them on will hurt nothing but the company's fiscal returns. This a decision solely based on profits and the ramifications of saving/not saving that money.

I have trouble seeing how this is politics or news. Try OT.
Anandtech Moderator - bsobel
 
48,000 workers for a mere 1.5% profit margin? I fully admit that I am not an executive or CEO, but the gain seems too small risk the bad Public Relations and decreased dynamics of the work place. Even a CEO making $200,000 per year would only see a $3,000 pay increase, which is 'bupkiss' at that Salary level.
 
depends, what is the initial cost and my long term return on investment? Will the initial cost be offset in 1 year or 50? Is my business in the pits, is my stock tumbling what is happening?

If we are going bankrupt then yes I do it, if we have heavy profits then probably not.
 
The simple answer is "Yes." A company in the US first and foremost has a fiduciary responsbility to its shareholders to maximize profits. Neglect of that responsibility can be considered a criminal act and would open the decision makers in such a company to lawsuits. A company in a capitalistic country does not make decisions based on altruism.

The more complex answer is that the decision would be up to the board of directors and the shareholders themselves to take such an action. While this answer seems simpler than the first it is not because it delves into many shades of grey.
 
No, but I admit I'd be a terrible executive at a large corporation. The stockholders would skin me alive. I don't like cutthroat business, I prefer the way small family businesses are run.
 
Lets say just for grins that this company makes $10 Beeeeeellion in profit every year. 1.5% increase in that net profit would result in $150 Million additional profit. Every shareholder (assuming a publically held company) would (and should) demand that management make that move.

Now, in the real world, you might figure on seeing a 1.5% increase in profit, but what does this move to do the PR situation? Your products in the marketplace? The economy? The morale (and productivity) of remaining workers? Those are some of the questions you would have to answer before you could come to a conclusion......
 
Originally posted by: Jaskalas
1.5% is too small. Workers, IMO, have a steeper price on their heads.
Click to expand...

In such a situation, CEO's need to look beyond that minor bottom line. Remember, we live in an economy and the company is, overall, better off(I think) if it kept those workers in place. For the workers will pump money into other sectors, and those that benefit from your worker's consumption can pump money back into your company.
 
Originally posted by: digiram
Originally posted by: Jaskalas
1.5% is too small. Workers, IMO, have a steeper price on their heads.
Click to expand...

In such a situation, CEO's need to look beyond that minor bottom line. Remember, we live in an economy and the company is, overall, better off(I think) if it kept those workers in place. For the workers will pump money into other sectors, and those that benefit from your worker's consumption can pump money back into your company.
Click to expand...

Thank you for pointing that out! As much as I'd like to fire them for that increase in profit, I'd have to consider what the overall affect this would have on the market. 48,000 employees would mean less vehicle buyers or whatever product this scenario can call for.
 
No, the PR would be terrible, the unions would go on strike, people would boycott your company etc...

Also, a layoff that massive is not just a business decision, it is a political decision, you can bet that if you lay off that many people you will have the politicians in that areas giving you all kinds of cr@p over it, union leaders would be all over your ass, and you can bet someone will find a way to make it sound racist and the NAACP will be calling for boycotts.

Then of course, the board would probably fire you to try and save face, so its not like you are gonna be making out with all the money either.
 
Originally posted by: dmcowen674
Originally posted by: yllus
Do you fire 48,000 workers in favour of that 1.5% profit increase?
Click to expand...

If the profit margin is truly 3-6% as P&Nrs claim then absolutely, fire all 48,000 immediately.
Click to expand...
Where is this claim in the thread?

 
Originally posted by: EagleKeeper
Originally posted by: dmcowen674
Originally posted by: yllus
Do you fire 48,000 workers in favour of that 1.5% profit increase?
Click to expand...

If the profit margin is truly 3-6% as P&Nrs claim then absolutely, fire all 48,000 immediately.
Click to expand...
Where is this claim in the thread?
Click to expand...

Unlike apparently 99.9% of P&Nrs I have a memory.

OK, so what is the profit margin of this Company?
 
Originally posted by: dmcowen674
Originally posted by: EagleKeeper
Originally posted by: dmcowen674
Originally posted by: yllus
Do you fire 48,000 workers in favour of that 1.5% profit increase?
Click to expand...

If the profit margin is truly 3-6% as P&Nrs claim then absolutely, fire all 48,000 immediately.
Click to expand...
Where is this claim in the thread?
Click to expand...

Unlike apparently 99.9% of P&Nrs I have a memory.

OK, so what is the profit margin of this Company?
Click to expand...

Originally posted by: yllus
I've outlined a basic sample business decision by, for the sake of this example, a car company.
Click to expand...

Cease your trolling.
 
The solution to this problem is simple, at least until you get a union involved. Since this automation will not all go in overnight, there is no need for mass layoffs. You can handle this via attrition, early retirement and buyouts over a period of years as new processes and equipment go in.


However the current state of the big 3, if you lay someone off because you automated their job, they go into a jobs bank where they do nothing and draw 90% of their pay for the rest of their lives.

 
Originally posted by: BarneyFife
You also lost 48k customers and their families for life.
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Not a big deal in the scale of a country with 300M people. However if handled via buyouts, early retirement and attrition, very few customers if any would be lost.
 
Strawman for the win!


That isn't how the numbers game is played.


The automakers would love to keep all their employees, but concessions beat out of them through strikes don't necessarily yield sustainable business.


I doubt 1.5% would be worth their time, they can accomplish that through attrition. Automation isn't cheap and isn't guaranteed unless the model is just so hot and has a long projected life.

I do know that if given the choice building a more automated assembly line would be the way to go.




You can't have a poll without a real choice. You should work in politics
 
Considering that I am the one providing the example scenario, I'm not quite sure how I would use a straw man argument...against myself? Next, considering the fact that the poll is almost evenly split, it's pretty obvious that "real choice" has been made available.

An 1.5% increase in profits could equal, say, $180 million. 48,000 lost customers could pale in comparison to those gained due to the reinvestment of that 1.5% of profits into the company and the improved product line you could come out with. And anyone involved in robotics will tell you that no automation is ever built to be model-specific - that's just insanity. It doesn't enter into the equation.

The purpose of not providing a hard number or abundant detail is to get people to consider the purpose of a corporation. In the end, as TastesLikeChicken stated, the duty of the company president is to profits, not to provide employment. I voted "yes" in the poll.
 
Originally posted by: yllus
Considering that I am the one providing the example scenario, I'm not quite sure how I would use a straw man argument...against myself? Next, considering the fact that the poll is almost evenly split, it's pretty obvious that "real choice" has been made available.

An 1.5% increase in profits could equal, say, $180 million. 48,000 lost customers could pale in comparison to those gained due to the reinvestment of that 1.5% of profits into the company and the improved product line you could come out with. And anyone involved in robotics will tell you that no automation is ever built to be model-specific - that's just insanity. It doesn't enter into the equation.

The purpose of not providing a hard number or abundant detail is to get people to consider the purpose of a corporation. In the end, as TastesLikeChicken stated, the duty of the company president is to profits, not to provide employment. I voted "yes" in the poll.
Click to expand...

So Mr Pro Business, how much should auto workers make $10hr low enough?

I bet it's perfectly OK for the corporation to not lower the price of the cars accordingly too.

An extra $200 million for the CEO from the $180 million he saved axing 48,000 employees perhaps?
 
Since I could be the greedy CEO of the automation company doing the huge automation project, I might just think about it! :Q

But since I'm not.....
 
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