Plant Closings and Layoffs

Introduction

In recent years, due to advancement of technologies, corporate restructuring, changing markets, economic downturn and increased global competition, the perception workforce had changes due to the increasing possibility of plant closure and layoffs. During plants closings and layoffs, employers should precisely follow its policies and procedures, and abide the state laws that establish criteria and policies for selecting employees during plant closings and layoffs. These criteria must be based on legitimate business decision and considered legal as long as they are applied consistently and backed with documentations and evidences, else, might be considered as unjust termination.

Thus, most companies tend to offer laid off workers several assistance such as severance pay, outplacement service and employment references. Furthermore, if plant closings and layoffs are not handled appropriately would negatively affect the business and workers, their families, communities and even government. How should business deal with plant closings and layoffs?

Cases of industrial conflict

In the recent years, many companies had close down its plants and layoff employee for survival.

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During the plant closings and layoffs, cases of industrial conflict occurred due to the failure to identify the potential opposition and incapability, such as communication and personal variables. For instance, during the gradual closure of electric plant location in Southern California, the company receives approximately 70 out of 125 laid off workers’ compensation claim filings (A Workers’ Compensation Practice Communication 2009). Another scenario of poor business handling happens when Peugeot announced the closings of its plant, resulting in French workers protesting by disrupting the productions, until their demands are met by management (Tsaousis, 2013).

However, these scenarios are avoidable through the decisions and strategies taken by the management. For instance, when a clothing manufacturer closed a production facility, the management developed a strategic plan to minimise closing costs and the only one complaint filed were denied eventually.

Complaints and conflicts are being minimised through managements’ careful strategic planning such as being transparent about the current conditions of the organisations (A Workers’ Compensation Practice Communication, 2009). Similarly, IBM had also announced its decision of plant closings and would layoff approximately 3,700 workers. To reduce the possibility of industrial conflict, IBM had agreed to work with local trade unions and employment centre to ensure the employability of the workers (Agreement between IBM and unions over plant closure, 2002). Businesses should be treating laid-off employees with respect and sensitivity through constant communication, giving employees options on how exit should be handled, such as outplacement services, severance pay and retraining.

Psychological contract

Furthermore, management should keep in mind that beside employment contract, there’s a psychological contract that with the laid-off employees or survivor. The employees would infer set of expectations from employers’ actions, which include expectation of fair treatment. If management failed to uphold the expectations, the employees might respond by certain actions such as complaints and protest. Nonetheless, employers need to take note of the WARN act, providing 60 days advance notice for affected employees to make adequate preparations (Layoffs laws, regulation, analysis - HR.BLR.com, n.d.). How should Labour deal with plant closings and layoffs?

In France, workers at Peugeot Citroen staged a strike to protest the planned closings of that plant, when announcement were made to lay off total of 8,000 workers. While in U.S, the president of the Association of Injured Workers and Ex-workers of General Motors Colmotores (Asotrecol) went on hunger strike to draw public attention regarding the layoffs of General Motors (GE) (Grevatt, 2013). This scenario happens when affected employees would experiences loss of wages and benefits, anger, denial and loss of secure income. For those affected workers, disputing against previous employees might not solve their issues on being laid off. Instead, these employees should start looking for new jobs and opportunities, upgrading themselves with skills, or helping out in the communities. For instance, when Ed Neufeldt was laid-off by Monaco Coach, he and other unemployed workers went helping homeless shelter gut and renovate building for an expansion. It shows that by establishing support groups among the laid-off workers would minimise the potential costs of industrial disputes (Mayerbrowitz, 2008).

Upon receiving layoff notice, employees should check with the company on the benefits or compensation entitled when leaving, and is informed about employee’s legal rights. Employees should start preparing layoff to shorten time of unemployed, such as preparing resume with career related milestones, keeping network alive, upgrading or learn new skills, taking time for one to ensure emotional well-being, think about career change (McKay, n.d.). The reaction of survivors could range from the fear of becoming next layoff victims to the guilt of having positions while co-workers lose theirs, would affect the morale and productivity of remaining employees (Luther, n.d.). How should Government deal with plant closings and layoffs?

Industrial Relations Act

Government had passed Industrial Relations Act, for the regulation of the relations of employers and employees, to prevent and provide settlement of trade disputes by collective bargaining, conciliation and arbitration, or having tripartite mediation (Lim, et al., n.d.). Under the legislation of Industrial Relations Act, employer must give due recognition to it and negotiate with class of employees. The act also establishes the Industrial Arbitration Court as highest court to adjudicate all industrial matters that arises (Singapore statutes Online, 2004). In France, workers in Peugeot protested by disrupting the production when the management refuses to negotiate regarding the compensation package after plant closure and layoffs. In such scenario, government should play a role of a conciliator where disagreements occur, especially when management refuses to address issues with workers or pressuring employers to comply with the state law, or sue the employer for noncompliance (Silva, 1996).

For instances, Continental Tire workers protest against the layoffs, to fight for good jobs at living wages. Thus, National Labour Relations Board filed complaint against Continental Tire for the tactic its management used during contract negotiations (Continental Tire workers protest layoffs, 2006). Government should provide monetary aid and intensive form of employment during plant closures. For instance, Federal Government gave millions to Ford, to continue its production till end of 2016. However, this would not solve the pending closure and layoffs. Thus, Federal and Victorian governments pledged millions to help and source new opportunities for the communities and work together, to create new work for affected workers and families (ABC, 2013). By doing so, the contribution could allow company to postpone plant closures, minimise number of layoffs and offer better severance pay or compensations.

Furthermore, government could try to attract foreign companies to invest in to create more job opportunities. How should Society at large deal with plant closings and layoffs? Society at large includes sectors such as government, communities, unions, families and individuals. Thus, the laying-off of bus drivers not only affects the workers, but all individuals and different sector in the society (Working for America Institute, 2001). When plant closings and layoffs occur, the livelihood and re-employment became an issue for those laid-off workers.

For instance, after being laid-off in Boston, unemployed Americans, especially the older workers face long-term unemployment and struggled to recover from job losses (Woolhouse, 2013). The scenario should be avoidable if the society work together to get the older workers a chance of re-employment. For instance, the Labour Movement initiated by NTUC had managed to engage business, government and whole workforce to re-employ those laid-off workers, especially the older ones. Furthermore, NTUC had offered funds such as “U Care” to engage the society at large to ease the financial burden of the employees, and subsidises some seminars and courses for the laid-off workers to enhance their employability (NTUC U Portal- U care Fund extends a helping hand, 2012).

Conclusion

In conclusion, plant closure and layoff might cause rapid changes to businesses, labour, government and society at large. These strategic actions causes emotions like anger and fear to the laid-off workers and their families’ members as they lose their source of income, felt insecure and uncertain of the future.