Timesizing® Associates - Homepage

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Timesizing News in January, 2001
[Commentary] ©2001 Phil Hyde, The Timesizing Wire, Box 622, Cambridge MA 02140 USA (617) 623-8080

1/31/2001  glimmers of timesizing -

• Schwab tells some workers to stay home - Three Fridays canceled in bid to cut expenses, by Patrick McGeehan, NYT, C1.
  Forget casual Fridays, the Charles Schwab Corp. has started canceling Fridays.
  In a bid to cut expenses, Schwab, the San Francisco-based brokerage firm, has told about half of its employees not to show up for work on [any? or alternate?] three Fridays in the next five weeks. Stretching out the weekends will bolster Schwab's reported earnings for the quarter, even though the firm expects most of the eligible workers to use vacation time.
  Christopher V. Dodds, Schwab's CFO, said the three-day weekends are the latest in a series of steps the company has taken since November to reduce costs during a slump in stock trading by the individual investors who are Schwab's main customers. Their trading, on which Schwab earns commissions, dropped off when prices of technology stocks collapsed last spring and has not bounced back. That slowdown contributed to a 27% drop in the firm's earnings in the fourth quarter, during which it barely surpassed the 12% pretax profit margin that its executives have pledged to exceed every quarter. Late last year, the brokerage firm slashed the salaries of its executives by 5-50%, froze most hiring and told employees to limit their spending on travel and entertainment.
  "We are looking as a management team at a whole wide range of steps we could take without resorting to the blunt ax of layoffs," Mr. Dodds said. "We view layoffs as darn-near the last resort."
  [Now here's an intelligent, non-suicidal executive at last!]
  Mr. Dodds declined to say how much money Schwab expected to save from these measures, which he described as creative alternatives to laying off workers. The savings from Fridays off "is not a huge amount of money," he said.
  [This is the core of timesizing: cutting worktime and not workforce - and markets.]
  Amy Butte, an analyst at Bear, Stearns, estimated the Fridays off could reduce the firm's compensation costs by $9-15m, or less than a penny a share. Ms. Butte, who recommends buying Schwab stock, called the decision to avoid layoffs "a long-term positive" because it would build good will with employees and maintain the firm's capacity to handle higher levels of trading activity when the market rebounds....
  Mr. Dodds said all employees who do not deal with Schwab's customers or support those who do have been told to take the three Fridays off. Schwab expects that group to comprise between 8,000 and 13,000 of its 26,000 employees. Customers should not notice a difference when they visit branches or conduct trades online or by phone, he said....
  A Schwab spokesman said the firm did not yet know how many of the eligible workers would take the Fridays off without pay and how many would use vacation days. Either way, Mr. Dodds said, the long weekends will help the firm meet the earnings goal it reiterated two weeks ago when it announced its first decline in quarterly earnings in three years.
  On its books, the firm accrues a liability for unused vacation time built up by its employees. As they use the vacation days, the firm reduces the liability, increasing its reported earnings for the period.

• More 'layoffs' at Delphi [our quotes], Bloomberg via NYT, B2.
  TROY, Mich...- Delphi Automotive Systems, the auto-parts maker, said today that it would 'lay off' about 5,000 workers for a week starting Monday because of production shutdowns by General Motors, its biggest customer and former parent.
  [Funny how they report this as exactly the same kind of tragedy as indefinite downsizing, but these are 5,000 people who still have their jobs. See their previous timesizing announcement four days ago on Tuesday 1/23. With 4,300 involved then, that probably refers to the just-past workweek of 1/22-26, or it could possibly represent an preliminary smaller announcement of today's announced 5,000 timesizing for the coming week, 1/29-2/2.]
  Most of the Delphi 'layoffs' will be in plants in Ohio and Michigan, with smaller numbers in Alabama, New York and Indiana, a spokeswoman, Claudia Piccinin, said. Delphi had to furlough about 4,300 workers this week after G.M. shut down three assembly plants.
  [In short, they're manipulating their worktime instead of their workforce. This makes sense, because it varies worktime with markets instead of workforce. That buffers and slows the slide to recession. You start varying workforce with markets as markets shrink, and you rapidly develop a self-fueling death spiral to recession - as we're now in fact doing once again - market shrinks - workforce shrinks - spending activity shrinks - market shrinks - workforce shrinks - spending activity shrinks - etc. etc.
  [A followup mention on 2/13/01 indicated that Delphi's timesizing, not downsizing, continued - "Delphi Automotive Systesm Corp., the world's largest auto parts maker, begain temporary layoffs in mid-December, following temporary shutdowns at GM Corp., Ford Motor Co. and DaimlerChrysler AG plants. Delphi continues to idle between 2,000-5,000 workers each week, said Alan Dawes, CFO." This info pops up in the middle of "Parts maker Dana cut 10,000," AP-NY-02-13-01 1832EST via AOLNews.]

• G.M. and Ford set to close 7 plants, AP v ia NYT, C2.
  ...in hopes of winnowing bloated inventories. GM [will] temporarily close 5 plants for the week...Oklahoma City...Oshawa ONT...Orion Tnshp MI...Lordstown OH...and Hamtramck MI. All of the shutdowns, which GM said would affect 14,400 workers, were previously announced, except for the Hamtramck plant.
  [That's 14,400 workers who still have their jobs because of this relatively enlightened approach of cutting worktime, not workforce, in a crunch.]
  Ford said the two van plants it would idle were in Avon Lake OH...and in Lorain OH.... Those plants employ 4,150 hourly workers, a Ford spokesman, Ed Miller, said.
  [Another 4,150 people who still have their jobs and won't be desperately running around trying to find new ones, instead of continuing more or less their usual spending patterns and cushioning the downturn. This week on, week off, approach to "timesizing, not downsizing" isn't as good as a constant week-by-week or month-by-month adjustment of the workweek, because it finesses the question of overtime, although we think by the time these car companies start idling plants for a week at a time, they've discontinued all costly overtime. The other advantage of an hours-off-the-workweek trimming approach instead of a week-off-the-workmonth approach is that you can use the variable overtime pressures that are liable to result when trimming hours as targeters for cross-training programs. Plus you don't get into hard restarts of machinery that's been shut down for a week.]

1. Caterpillar enlists seasonal layoffs, AP-NY-01-23-01 1618EST via AOLNews via RadioTony.
   [They probably mean "temporary" layoffs. There's nothing necessarily seasonal (i.e., cyclical on an annual basis) about the downturn in demand that Caterpillar Inc. is reacting to - and reacting to much more appropriately than downsizing.]
   PEORIA, Ill. - About 2,500 Caterpillar Inc. employees are temporarily out of work without pay this week while the company shuts down some plants as part of an effort to bring production in line with demand.
   [But unlike a lot of Americans this week, they still have a job next week.]
   About 1,500 of the affected employees work at Caterpillar's Mossville truck engine plant and 977 work at the track-type tractor facility in East Peoria. Divisions at both plants are shut down this week but are expected to begin production again next week.
   Caterpillar, the world's No. 1 maker of heavy construction machinery, announced last week that demand for its products in North America is expected to decline this year.
   [And by cutting worktime instead of workforce, Caterpillar has avoided reducing demand further.]
   The Peoria-based company designs and makes mining, construction, and agricultural machinery and engines. It operates manufacturing plants in 22 countries.

2. Swedish steel workers agree to 7% wage increase over 38 months, Bloomberg Jan/23/2001 5:45 ET via AOLNews.
   Stockholm...- Swedish steel workers and employers agreed on pay increases of 7% over 38 months, newspaper Dagens Nyheter said. The agreement, affecting 27,000 workers, entails a reduction in working hours equivalent to a 1.5% pay increase in the 38-month period, the newspaper said.
   [Do they mean "includes" a reduction in working hours...?]
   "It's a satisfactory agreement," said Goeran Johnsson, chairman of Metall, the union representing the steel workers. "We have real salaries every year [meaning not degrading due to inflation??], shorter working hours, and have brought about some other improvements."
   [So how much of a time reduction is that? We aren't told, because American media are kinda clueless about time management where it really counts = workshare per person per week. Apparently there was also another group of employees who came to a similar agreement last week -]
   Last week, workers in the plastic, rubber and drug industries agreed to annual wage increases averaging 2.3%, and a reduction in working hours equivalent to three days over 38 months....
   [But if we're talking about three 8-hr days, this only gives us (3x8)/38= 24hrs/38months= only 0.63 hr or 38 minutes a month. How meaningful is a reduction of only 38 minutes a month? Maybe some light is shed on this by the contract with the Swedish paper and pulp workers described above on 2/07/2001.]

1. [Two] auto parts suppliers will temporarily lay off 10,300, AP via NYT, C4.
   ...The Delphi Automotive Systems Corp. and the Visteon Corp. said they would temporarily lay off a combined 10,300 hourly workers this week. The 'layoffs' [our quotes] are a result of slowing vehicle sales and production cuts by automakes. Delphi, the world's largest automotive supplier, said it would 'lay off' 4,300 workers for a week. Nearly half will be at 25 sites in Ohio, and the rest in Mich., Ind., and NY, a spokesman said. The Visteon workers, about 6,000, are largely in Mich., Ind., and Ohio, a spokeswoman said.
   [Primitive, but - a primitive step on an advanced technology is way ahead of a sophisticated step on a primitive technology like providing counselling and outplacement services for the victims of your suicidal downsizing policies. What's the most advanced, flexible, gradual and market-oriented version of this "cut hours, not jobs" approach look like? Check out Timesizing, not downsizing.]

2. Poll - U.S. jobless rate seen rising modestly in 2001, by Daniel Sternoff, Reuters 10:42 01-22-01 via AOLNews.
   ...Stephen Slifer, chief economist at Lehman Brothers, said..."Businesses are cutting back on overtime, letting go of temporary workers, and working people shorter hours rather than just going in and laying off bodies....
   [Great - anything that impacts the workweek instead of the workforce (alias consumer base!) is on the right track.]
   The reason is that the unemployment rate is at 4%...."
   [But see our warning about the supposedly low U.S. unemployment rate.]
   "...If the slowdown proves to be fairly short-lived, you may not be able to get those folks back five to six months down the road," he said.
   [This is the skill retention argument for cutting hours, not jobs, and a good one it is, with spoiled employers so reluctant to train these days.]
   ..\..Said John Ryding, senior economist at Bear, Stearns & Co. in New York..."There is a backlog of job openings that have been created over the last 1-1/2 to two years."
   [We wish we were as gullible as John, but a lot of employers talk big about hiring, and he has not discounted for this "happytalk factor."]
   "You can see that in the gap between job creation and indicators of hiring intentions. The two used to track each other closely. Now hiring intentions have exceeded job creation for the last couple of years," he said....
   [We infer that "the two used to track each other closely" in the early 1990s when there was a genuine labor surplus in the highly publicized high-tech area and employers started with flexible job descriptions and bigger training budgets. However, that flood of resumes spoiled them into tightening their job descriptions and cutting their training budgets. Now there is a skills shortage, not a labor shortage, but spoiled employers don't want to accept that, flex up their job descriptions and beef up their training. So hiring lags "hiring "intentions." And (1) spoiled employers are still waiting for perfect employees to fall into their laps, and (2) today, even if some did, many employers won't hire them anyway because they have a hiring freeze till the downturn disappears, or they want to hold out for some visas to bring low-wage, malleable youngsters over from Asia.]

1. ['timesizing, not downsizing' -]
   G.M. says it will close three more factories for a week, Bloomberg via NYT, C3.
   ...three of its 29 North American factories and furlough 2,450 workers next week to reduce production because of slack demand. Plants in Oklahoma City, Orion Township MI, and Oshawa ONT will be affected. Three other plants were idle this week. The temporary closings are part of GM's plan to reduce Q1 production by 21% from levels of a year earlier, to 1.2m vehicles.... It expected profits in Q1 to be marginal.

2. 2 more glimpses at the great French workweek experiment -
   • Danone cookie factories shut for second day as workers strike, Bloomberg Jan/18/2001 15:51 ET via AOLNews.
     PARIS - ...The strike comes after French daily Le Monde published excerpts of an internal company document that described a plan to close 10 European cookie factories, including seven in France.... The document's publication is a blow to..\..Groupe Danone SA, the world's largest cookie maker...which prides itself on harmonious labor relations. That's important for French companies, where unions were powerful enough to reduce the legal workweek [from 39] to 35 hours without a similar reduction in pay....
     [= timesizing to spread the diminishing market-demanded human employment and reduce their admittedly high unemployment, as indexed by an unemployment rate that counts a lot more of the problem than ours.]

   • French FinMin has no time for shorter week, Reuters 08:56 01-18-01 via AOLNews.
     PARIS... - France's Finance Minister acknowledged on Thursday [1/18?! - musta been pretty early in the morning] he was not setting an example when it came to following his government's edicts on shorter work time [SWT]. "It's a fascinating job, and very time-consuming. It's often 15 hours a day rather than seven," Laurent Fabius, number two in the government, told Europe 1 radio. The socialist-led coalition has decreed a cut in the legal work week from 39 hours to 35 to try to promote more employment. It has yet to be applied to civil servants, let alone politicians and ministers.
     [That's why it helps to have it tied in with reinvesting in on-the-job training - to automatically spread overload and dissolve overtime. But France still has only a primitive and rigid version of Timesizing.]

[So how is the shorter-workweek thing playing in Europe? Here are some hints -]
1/17/2001  INSEE study shows German wage rises outpace French, by Matthew Green, Reuters 14:52 01-16-01 via AOLNews.
PARIS...- A study [by Statistics France] of French and German wages showed on Tuesday that pay is rising faster in Germany.... Commentators say France's introduction of legislation to cut the working week to 35 hours from 39, which came into effect last year, allowed many companies to cap salary rises in return for shorter working hours...
[That would make sense, because a cut in hours without a commensurate cut in pay would equate to a pay raise anyway.]
...but that effect could wear off in coming years.
[Oh it definitely will. That's the whole point of cutting hours - to dynamize markets by centrifuging income and wealth.]
..\..Economists say French workers' pay demand could pose the greater inflationary risk in 2001.
[Well, since there's no centrifugation and bridging of the income gap without pay increases, if those increases per se are a kind of inflation, then there's a positive kind of inflation, a kind that centrifuges income and wealth and thereby dynamizes markets that over time, get more and more strangled by the relentless centripetal (concentrating, centralizing, consolidating) forces on income and wealth.]
...As French job creation outpaced its German neighbour...
[so the workweek cut is doing exactly what it was meant to do, despite the sneers of many conventional economists such as the editors of The Economist magazine of London]
firms are reporting greater difficulties in hiring workers from a shrinking pool of labour, raising the scope for workers to demand higher pay settlements.
[Two comments -

1. This is exactly the way hourscuts are supposed to work in order to boost domestic spending and rev up the economy to somewhere closer to its potential - they create a shortage of labor and market forces raise wages and centrifuge income and wealth - get it out of storage and into circulation. The more concentration, the less circulation and conversely, the less concentration, the more circulation.
2. If French employers are starting to complain about hiring difficulties when their unemployment rate is still up at the 9.2% level, as it was in Nov. (although that was the lowest in 9 years), French employers have been pretty damn spoiled by the labor glut that they have so carefully fostered all these years with their outdated exaggerated workweek - spoiled in hiring, and starved in domestic markets. Once they start paying their employees some fraction of what they should be getting and quit grabbing it all into storage in their own fat pockets, they'll see gradual dramatic rises in their markets.]
   

1/07/2001  weekend glimmers of timesizing -

• Job picture shows weakness, by Eileen Powell, AP-NY-01-07-01 1429EST via AOLNews.
  ...The Labor Dept. reported Friday that the nation's unemployment rate held steady at 4% in Dec., even as hiring by American businesses fell to its lowest level in 4 months. But the figure masks some disquieting trends: Manufacturing as a whole is taking a big hit, losing 62,000 jobs in December. That brought job losses [in the mfg sector] for the year to 180,000.... In addition, the government said factories are cutting hours. The factory workweek fell 0.8 hours in December, the biggest drop since January 1996....
  [If we had the a figure for the mfg workforce, before or after, and the actual mfg workweeks, before and after, we could estimate how many more jobcuts there would have been if manufacturers had cut jobs instead of hours. From another article, "IMM currency futures seesaw after U.S. jobs data," Reuters 11:37 01-05-01 via AOLNews, we get a workweek figure for all sectors of 34.1 hours after Dec's decline. If that held good for the manufacturing sector specifically, the workweek would have declined 8% to 34.1 hrs from 37.1 hrs. Say they had done it by downsizing instead of timesizing. Apparently they had no need for the productivity but in the absence of markets they needed to cut costs by cutting payroll 8% so they cut 8% of avg hours instead of workweek. So they cut 3 hours per person on avg, that's 3 hrs times 1,000,000 employees - 3,000,000 hours. If they'd done that by cutting people instead of time, they would have had to cut 3,000,000/37.1 hrs = 80,863 more jobs than the 62,000 they did cut. And that's just based on the conservative figure of 1,000,000 employees in the mfg sector on Dec. 1. So primitive timesizing is definitely at work saving jobs across our troubled economy today.]

• Auto parts maker idles 1,100 [actually 1,150], by James Hannah, AP-NY-01-05-01 1300EST via AOLNews via RadioTony.
  EAST SYRACUSE, NY...- New Process Gear will lay off 1,150 workers for a week because of temporary shutdowns at auto assembly plants operated by DaimlerChrysler, NPG's major customer and co-owner. The layoffs, which affect about a third of NPG's 3,700 employees, mark the third time in three months the company has [idled] workers because of slipping care and truck sales. However, for the first time, company officials hinted Friday that indefinite layoffs may follow in sales do not soon improve....
  [This is a company that definitely needs to stop fooling around with big, jerky ad-hoc layoffs of one-week-at-a-time and go for continuous workweek fluctuation for the whole workforce, adjusting up or down by one or two hours every week. This would be the next step in implementing a less traumatic, more workforce-galvanzing worksharing arrangement and would allow the targeting of constant cross-training by the incidence of "overtime" defined by each week's slightly adjusted workweek cap. We call this approach Timesizing.]

• General Motors says it will close 8 plants for a week, AP via NYT, C4.
  [This is a primitive form of timesizing, not downsizing -]
  GM said yesterday that it would idle eiht plants and furlough about 23,000 workers in the United States and Canada next week because its inventory of unsold vehicles had swollen. Car plants in
  1. Wilmington, Del.
  2. Kansas City, Kan.
  3. Ste Therese, Que.
  4. Orion Tnshp, Mich.
  and truck plants in
  1. Doraville, Ga.
  2. Shreveport, La.
  3. Linden, NJ
  4. Janesville, Wis.
  will be shut down for the week. All three major American carmakers have announced production cutbacks in recent weeks. GM shares rose....

• Philippine manufacturers said to face bleakest time in a decade, Bloomberg Jan/03/2001 3:50 ET via AOLNews.
  MANILA...- Philippine consumer demand is so weak and manufacturing costs so high that the nation may experience the worst round of layoffs and shortened work hours in almost a decade, an industry spokesman said.
  [Well the layoffs are going to weaken demand much further, but the shortened workhours are going to minimize the damage.]
  ...Said Raul Concepcion, chairman of the Federation of Philippine industries..."The manufacturing sector will begin to implement a four-day work week this month and we will begin to see shorter work days, or temporary layoffs of around 100,000 workers.
  [You boys either start sharing the available market-demanded employment as widely as possible, whether it goes up or down, or your "temporary" layoffs will be permanent.]
  Concepcion said the pinch will be most keenly felt in construction, consumer durable and food industries. His own company, refrigerator and air conditioner maker Concepcion Industries Inc., has begun implementing a shorter work week.
  [Very prudent.]
  ...Last time manufacturing companies voluntarily reduced work hours occurred in 1983.... In the early 1990s, manufacturers were forced to cut production because of a power crisis.
  [Sort of like California aluminum producers today. Well, US companies rediscover shorter worktime in every recession, and it seems Philippine firms do as well. They're versions are all pretty primitive and unintegrated with overtime-targeted training and hiring as we recommend in the Timesizing program, but eventually somebody will "get" it and there'll be a rapid "follow-the-leader" because of the almost unavoidable, almost embarrassingly quick success thereof. Look how far France has come after just a year of a minority of companies on their primitive 35-hour workweek plan - unemployment down 3% (see story below) and consumer spending up.]

1. France seeks shorter-workweek funds, by Emmanuel Georges-Picot, AP-NY-01-02-01 2227EST via AOLNews.
   PARIS - France is looking for new ways to make economically viable [with tax concessions] a law that cuts the workweek [from 39] to 35 hours.... But the government has pointed to a falling unemployment rate as proof that its [workweek-cutting] policies are working. The jobless rate has fallen from 12.6% in November 1997, just after the government's election, to 9.2% in November this [past] year..\..
   [That's a drop of 3.4% in two years - an average of 1.7% per year - from merely reducing part of the nation's workweek by a measly 4 hours! Wake up to worktime economics, you time-blind academics!]
   ...A court [blocked the government's] planned financing measures [in terms of] a broadening of a corporate eco-tax on carbon emissions and other measures. These measures were outlined in the 2001 budget; but last Friday, the country's constitutional court ruled that the financing measures were unfair, leaving the government short $507m.... The government had planned to extend this tax to some 40,000 firms. French industry has argued that the tax was unfair and indiscriminate..\.. The constitutional court did not question the legitimacy of the...tax, but deemed it should not be broadened....
   Olivier Eluere, an economist at Credit Lyonnais, said the government should be able to finance the 35-hour workweek law since it is likely to meet its forecasts for tax revenue in 2001 amid buoyant economic growth..\.. The government has had to offer companies, particularly small ones, tax concessions to encourage them to reach agreements with trade unions and workers to cut hours and hire more staff. Companies with more than 20 staffers were required to implement the policy as of Feb. 1, 2000, but businesses with fewer than 20 employees have until January 2002.... The shorter workweek law has received scorn from many employers, who say it is too expensive and criticize the government for meddling in the economy.
   [Too expensive when it has relieved them and the government from supporting 3.4% of the workforce as parasites, and can relieve them of supporting the remaining 9.2% as well? Again, we're seeing some pretty stupid and near-sighted employers, who aren't even noticing the added economic dynamism in France, compared with the rest of Europe and especially compared with the USA and Japan. Why? More earners, more spenders. "The less concentration (of income and wealth), the more circulation." Some of these employers accuse shorter-hours proponents of laziness, but maybe it's the employers who are the lazy ones, since they don't want the additional business that is generated by spreading more evenly the market-demanded employment.
   [And as for criticizing the government for "meddling in the economy," clearly they have not yet realized that this one policy (worksharing) has the potential to get the government out of the economy in almost every other way - because almost everything modern government's do is motivated by the need to bandaid all the problems and distortions caused by brontosaur-levels of the workweek that have remained frozen at 1940 levels despite 60 years of advances in automation, robotization and all kinds of other efficient, work-saving technologies. If the government "meddles" the right way, in the right part (the center) of the economy, it can quit its meddling everywhere else.]
   ..\..A Finance Ministry official...said Tuesday that the government was studying how to fill the financing gap.
   [Nothing simpler, except that it's sooo hard to see the obvious. The fairest way to buffer the transition for small firms is to tax overtime, that is, the profits or savings from overtime as compared to the costs of hiring additional employees that companies. Of course, you have to grant an exemption to companies that reinvest their overtime profits into training and hiring (particularly OJT - on-the-job training). Right now France has the most primitive and rigid form of the shorter-worktime approach. Timesizing is the most advanced and flexible form.]

2. Air France says strike by cabin crew won't disrupt services, Bloomberg Jan/02/2001 4:47 ET via AOLNews.
   PARIS - ...The strike was called by the CGT, FO and CFTD unions, which represent a minority of the company's 10,000 cabin crew....
   [Let's cut to the chase and glean the reason for the strike from the end of the above(!) article - "...Air France flight attendants...complain they were given less favorable terms than pilots in an August agreement to cut hours. Air France said it had canceled some flights and was chartering planes from other airlines to carry its passengers." Now back to the current article -]
   "The strike is having no impact on flights," said Brigitte Barrand, an Air France spokeswoman..\..
   [Maybe she means no impact on passengers.]
   Only a minority of companies have so far applied the law....
   [That's strange, considering the other article said that companies over 20 employees had to apply it last Feb. 1, which got postponed to Feb. 15, we believe. Is the paradox explained by the possibility that there are so many more small companies in France than large ones?]
   Work hours are harder to define for pilots and cabin crew than for other workers, analysts said, because they include the number of hours in the air, preparation for the flight as well as obligatory rest during stopovers and at home....
   One thing reformers started noticing as soon as they started pushing to standardize and reduce the workweek below the 80-84 hour level way back in the 1840s, was that EVERY SINGLE OCCUPATION felt that ITS "work hours were harder to define than for other workers." All we have to say to that is, all you sweetie pies you know that you are soooo speshull to ol' Mr. Timesizing (so for gawdsake, cut the crap!).]