By Kevin Meyer
A couple of recent stories on the same topic but from different angles really helps point out the cost of laying off. First Richard McCormack at Manufacturing News discusses the impact of GM shuttering a plant.
The economic impact caused by a single, large manufacturing plant
closing in America is massive, according to research conducted by the
Institute for Research on Labor, Employment and the Economy (IRLEE) at
the University of Michigan.
In a case study on the closure of the General Motors Moraine
Assembly Plant in Montgomery County, Ohio, IRLEE director Marian
Krzyzowski and associate director Lawrence Molnar found that for every
hourly job lost 15 jobs in the economy disappeared with it.
As one example:
GM closed its 4.1 million-square-foot Moraine Assembly operation in
late 2008, laying off 2,170 hourly workers. The event led to the loss
of another 10,850 indirect jobs (for a total of 13,020 jobs lost) in
the immediate vicinity of the plant.
But job losses cascaded through GM's supply chain, with the
elimination of another 3,334 jobs: DMAX laid off 645 workers; Jamestown
Industries laid off 80 workers; Johnson Controls laid off 130 workers;
PMG Ohio laid off 70 workers; Plastech laid off 88 workers; four Delphi
plants that supplied Moraine laid off 2,120 workers; Tenneco laid off
118 workers; and EFTEC laid off 83 workers.
As a result, the total number of indirect jobs lost due to the Moraine plant shutdown was 27,520.
In all 33,024 workers were impacted by closing one large factory.
Now for the other side of the story. Perhaps good news, with GM now rehiring or recalling some folks.
General Motors may reopen shuttered factories because it can’t produce
four of its vehicles fast enough to meet demand, and Chrysler is
preparing to hire more engineers and product development workers.
I won't dive into that so-called demands, since as we know GM records a sale when a car goes to a dealership, not when it is truly sold to a final customer. That creates all kinds of distortions which aren't the point of this post. So for grins let's simply consider this to be good news. A factory is rehiring!
But think about that rehiring in the context of the Manufacturing News article. Uh oh.
Yep, the same cascading effect, but in reverse. Hiring back a couple thousand people then requires second and third tier suppliers to also begin rehiring. A good thing for the workers, but think about the time lag, the training investment, and other startup costs.
It's not as easy as simply calling a couple thousand people at one factory and telling them to come back to work.
Perhaps something to consider before telling them to go home.