[AAACE-NLA] more food for thought about the labor market and implications for adult education
kaizen_esl at literacynet.org
Fri Apr 7 11:05:49 EDT 2006
Here, below, is an interview with an economics writer for the New York
Times. After the interview is an excerpt from the author's new book. He is
not a "leftist" or "radical" by any stretch of the imagination. The labor
market he describes is one that we all have to live in and through right
now. And, the current realities certainly hit the kinds of people who are
students in the adult education system the hardest, no matter how competent,
qualified or self-assertive or self-confident they may become.
We definitely need to add this understanding into what we do in our advocacy
and curriculum planning.
I look forward to your thoughts.
Sylvie Kashdan, M.A.
KAIZEN PROGRAM for New English Learners with Visual Limitations
810-A Hiawatha Place South
Seattle, WA 98144, U.S.A.
phone: (206) 784-5619
email: kaizen at literacyworks.org
Go to +++ for an excerpt from the book.
How Secure Is Your Job?
By Laura Barcella
AlterNet Posted on April 7, 2006
In his new book, " The Disposable American," New York Times business writer
Louis Uchitelle takes a sobering look at the sordid history -and the
future -of layoffs in America.
Though the bulk of his expertise lays in the business realm, Uchitelle
argues that layoffs' ascending frequency isn't just damaging America's job
security, but our sense of self-worth. He writes that the ever-insidious
"self-help" movement (specifically, books such as "Who Moved My Cheese?")
has encouraged workers to accept more responsibility for their own job
security than necessary -unfairly placing the whole burden of fair wages,
pensions and workplace stability on employees' shoulders rather than the
corporate heads hiring (and firing) them in the first place.
Unsurprisingly, almost every person he interviews in " The Disposable
American" seems to prove Uchitelle right. The human stories shared in the
book echo Uchitelle's hypothesis that getting laid off has long-term
negative effects on motivation and self-esteem, as well as making it harder
to land a more challenging position the next time around.
Fortunately, though, Uchitelle isn't just the bearer of bad news. He also
offers ideas for strategic solutions -potential ways to reverse, or at least
downshift, what he dubs the "U-turn" in job security that began in the late
1970s in response to rising foreign competition.
He spoke with AlterNet via telephone from his New York office.
Laura Barcella: First, tell me why you decided to write this book.
Louis Uchitelle: I have been covering the rise of job insecurity since the
late '80s, and I became interested in what was happening to people. There
was always this idea that we would get rid of the blue-collar workers [who]
weren't pulling their weight, and it kept going, on and on, into the
At the New York Times, I was the lead writer on a long, six-part series in
1996 that laid out what was happening -and by then we had gone through so
many barriers of resistance to layoffs, or of limiting them, and the Clinton
administration at that point came in and said -we'll keep the layoffs and
handle it by job creation and by reconditioning workers -education and
training. And we'll cycle them back into the work force. The more I wrote
about that, the more I realized that something was very wrong, and I finally
put it together in a book proposal.
Laura Barcella: What sorts of reactions have you received thus far?
Louis Uchitelle: People think it's an important book Two issues that I
think are very important is this myth that people can, through more
education and training, cycle back into the work force with perfectly good
jobs. The evidence is definitely against that. First of all, there is an
oversupply of skilled people relative to the jobs that are available. And
secondly, we don't properly measure the damage to the companies themselves
and the productivity that comes from job security.
To people who are, in effect, told that this is a be-your-own-manager
society, when they're laid off, [it's implied] that they don't have value as
workers -and that's a considerable psychological blow and a source of mental
illness. I didn't realize that until I started to report this book, and ran
into it over and over again among the people I was interviewing. I went to
psychiatrists, and they said that there was no question about [layoffs'
damaging psychological effect] on people -some people more than
others -depending on their personality and predispositions.
But it means that people don't get back into the work force using all their
old skills. They don't take risks, and they suffer. It's a memory that
undermines them for many years -and this is not a story about unemployment,
it's a story about layoffs. Most people go back to work again or drop out
Laura Barcella: What were some of the long-term psychological effects of
Louis Uchitelle: I found people constantly trying to figure out what
happened to them, trying to figure out if they had just done this, or had a
different boss, or changed departments They kept going over and over it
again; why did this happen to them? They sought, in these conversations,
some peace of mind. They tried to regain their self-esteem.
There's a sociologist named Richard Sennett who, in his book " The Corrosion
of Character," makes the point that we all have a life narrative, and work
is part of that narrative, and the narrative is part of our identity. If you
take away the work and the identity that comes with the work, you interrupt
the life narrative.
I found people trying to reconstruct that narrative in various efforts, and
I think you would see that in somebody like Kim Dewey, one of the mechanics
[quoted in my book]. There's others, like Craigy Imperio, who got his
engineering degree and who, through hard work, has managed slowly to work
his way up the ladder. But others don't do it.
Laura Barcella: Were the psychological effects similar or equal among
people -blue collar vs. white collar?
Louis Uchitelle: The effects are similar for everyone -blue or white.
There's not that distinction. The effects are determined a bit by
personality. Some people are more prone to damage than others. But there is
some damage [for everyone]. Some people bounce back from it, but most don't
bounce back from it easily. They lose something.
Laura Barcella: You said it could almost be seen as a mental illness, in
terms of how the workers see themselves
Louis Uchitelle: Well, I don't want to make it seem like mental illness in
the sense of straightjackets. It takes away their self-esteem, and that
undermines your mental health. It's not good for mental health.
Laura Barcella: Did most of the people you spoke with bounce back later?
Louis Uchitelle: There's one person in the book, a first-rate aviation
mechanic, who got his engineering degree while he was a mechanic. He was
hurt by [his layoff] and rather than take a challenging job and risk having
this happen again, he's now working in the Indianapolis school district as a
Another mechanic who had this happen also got his engineering degree after
he got laid off, in fact he was spurred to do that by the layoff, and he has
a pretty tough life behind him. He ended up having to take an aviation
mechanic's job at half his old salary, but by dint that he's a good
politician, he played golf with his supervisor, he got to know this one and
that one, and he got himself finally promoted to an engineering job and is
working his way back up the ladder. He still isn't making as much as he was
making before, but he dealt with it differently. He was also damaged, but he
came back from it better.
You can't tell who is more damaged. You can't say -well, we can do this
because enough people aren't all that damaged. You don't know what's going
Laura Barcella: Have you ever been laid off?
Louis Uchitelle: No.
Laura Barcella: I was -in my first magazine job after college. They laid
off about 20 people at once.
Louis Uchitelle: It's not unusual for young people to go through a few job
changes before they arrive at a career, but at some point in our 30s, people
commit themselves to something, or try to -and then if they lose that job,
it's really a blow. They commit and then spend five or six or ten years at
it, and [if they] then lose it, it's difficult.
Laura Barcella: Did you notice any differences among people who had been
laid off individually or in small groups vs. in huge companywide layoffs?
Louis Uchitelle: To some extent, if it's a layoff where it's a unionized
shop and everyone gets laid off by seniority -in four or five steps -that's
a little bit better. But, no, it's still a sense of loss, and it's still a
disruption. People want to belong to an organization. And when they can't,
they try to find some other way to belong, if they can possibly do it.
We are destroying the communal nature of our lives -that's what I'm trying
to say in the book. I don't think we can stop the layoffs. We do live in a
global society, there is a change; but we're not dealing with this as a
community, and in not doing that, we are going to excesses.
Laura Barcella: Can you explain what changed in the late '70s, when, as you
noted in the book, there was a "U-turn" in layoffs?
Louis Uchitelle: In the late 1800s, we created these giant corporations. We
had this big ocean-to-ocean mass market. No nation in the world had ever had
such a large market. We served it first with these big coast-to-coast
railroads, and then with Sears Roebuck and U.S. Steel. These were
complicated, huge organizations, and the managers of these organizations
understood that they had to have experienced, skilled people to run them.
That required longevity in the jobs, which meant job security. They designed
pensions so that the people would stay and they encouraged that -it actually
had a name -welfare capitalism.
While there was plenty of hiring and firing going on in this period, the
major companies, the pace-setters, pushed for job security as the best, most
efficient way to run their companies. Alfred Chandler, a famous economic
historian, describes this vividly in a book called " The Visible Hand." He's
an older man now, a Harvard economist; it's a classic book.
A company like Procter & Gamble, concerned about losing people, started
offering a percentage of stock every year. As the stock kept going up, that
became a wonderful retirement fund, but you had to stay in the company for
30 years to get your hands on the money. Then we came to the Depression, and
companies weren't so eager to keep people on. Then we had New Deal
legislation, which strengthened job security.
You have to understand that you can describe, in the 1920s, a period very
similar to what's going on now. But then we didn't know any better, and we
were going up the ladder towards job security, and now we're going down.
[The downward trend] started in the mid to late '70s, when we were no longer
the dominant supplier of goods and services -not only to ourselves, but to
the whole world. Suddenly we got competition, and we dealt with it with
layoffs, some of them quite legitimate.
But slowly thereafter, from '77 to '97, we started taking down barriers to
layoffs. We started insisting that there was no problem, that the people who
got laid off weren't properly skilled -all they had to do was go back to
school and get more skills, and they would qualify for all the good jobs out
there that were going begging.
In fact, there's any number of statistics that show that we have skilled
people in excess of the demand for them. Thirty-seven percent of all airline
attendants have bachelor's degrees. You don't need a bachelor's degree to be
an airline attendant. It's nice to have it.
As one barrier [to layoffs] after another came down, the layoffs went up. We
had a steel company shutting down mills, and there was uproar about it,
attempts from the communities and the unions and church groups to buy the
mills and keep them open, then that disappeared. We gradually acquiesced to
the process. There was a backlash in the early '90s, when there were
corporate killer type of articles. There was a lot of bragging, on the parts
of CEOS, about what was happening. And there was a political backlash. Ross
Perot in '92 and Pat Buchanan in '96 did well in primaries and elections, on
the basis of the unhappiness over layoffs. Clinton finally dealt with it by
saying, "Look folks, we can't stop the layoffs. We will try to make
The companies themselves got the message and became much more PR-oriented in
dealing with layoffs. They didn't reduce the layoffs, but handled the
announcements a lot more suavely than they had before. Clinton said that we
would create jobs and provide training to reinvent people as workers. First
of all, he didn't provide enough money for the training, and second of all,
even if he had, it would have been hard to work out. So, we didn't do it as
a community. We didn't say, "Look, there aren't enough good jobs out there.
If layoffs must go on, as a community we have to have some way of helping
Laura Barcella: You mention that the way people get laid off has changed.
Louis Uchitelle: We've acquiesced to it -that's one thing. You don't find
mass layoffs as much as you used to. You find announcements that 20,000
people are going to be laid off, but in fact it doesn't happen like that.
Companies lay off a dozen people today, and another dozen three weeks from
now. It goes slowly, and the people who remain say to themselves, "Maybe it
won't happen to me if I keep my head down."
But there isn't this mass -from one day to the next, 20,000 people
disappearing. That happens occasionally, but not very much. The companies
themselves are as careful as they can be about handling it; they just keep
Laura Barcella: What about the psychological effects on corporate heads?
Are they internalizing this fear and anxiety, too?
Louis Uchitelle: I don't know the answer to that -that's to be explored. I
know that there isn't an acknowledgment. I've asked psychiatrists at the
American Psychiatric Association [about] why they don't go public. Why isn't
there a warning label on layoffs, as there is on cigarettes, that this is
bad for your health? They say, "We can't do that." Then we'd have to put a
warning label on divorce, or war, so we'll treat the symptoms, not
That might get revised as time goes on. I'm going to appear on a panel at a
psychiatric convention to discuss this issue. There are people wondering
about it. There was one group that tried to raise an issue about this in the
early '80s -long before I discovered it. I suddenly ran across a book that
was written. I met with these people, and they said it was very hard; they
were all consultants at companies, and the people that employed them did not
want to hear about what damage they were doing.
Laura Barcella: What are some viable alternatives to layoffs?
Louis Uchitelle: I'm a great believer in democracy. I think that whatever
happens has to come out of the people. The first order of business is to
count the layoffs accurately. We undercount them; we leave out the hidden
layoffs, the forced retirements. If we included them, we would probably come
up at seven or eight percent of all full-time workers losing their jobs
every year. And another four percent or so that are newly counted.
Secondly, I think that we should require companies to document how people
leave -by retirement, by layoff, by quitting, whatever means. We would then
have a database that we could study; academics could come in and say, "Among
computer-makers, the norm is 100 layoffs a year, but here's a company that's
doing 150 -why are they beyond the average?"
I'm talking on the margin. I have no overall solution. Then we have to face
the concern -how are we going to create enough jobs for the people who are
laid off? How can we send them the message that we want them employed? That
might require, perhaps, some recognition that the private sector -by itself,
even with the best will in the world -cannot create enough jobs to keep
people fully employed at good wages. Once that's acknowledged, we have to
decide where to go next. My job is to lay out the case.
Laura Barcella: What can people do who might be nervous?
Louis Uchitelle: They could band together, form groups, and understand
what's happening to them. Face the idea that if they look at it as a group,
it's not a comment on their skills, that they are corks at sea in a storm.
And perhaps make the point, politically, that this business of retraining
for good jobs is not a solution. I'm not saying we shouldn't be educating
people -we absolutely should be. I'm not saying education doesn't matter at
all. If you're going to build a bridge, you need engineers to build it. But
you have to have a demand for the bridge as well as the engineers. There is
a certain supply and demand, working together -but we're trying to make it
all supply. We're trying to say that everyone who gets properly educated
will magically have good work and good pay, and if you don't have it, you
must not be doing the right thing.
Laura Barcella: How are you hoping your book will influence the layoff
landscape and job security in general?
Louis Uchitelle: I'm hoping it will help people look at it more
realistically and puncture the myths that are out there. They should also
recognize that we are a communal society; we have always been that. Once
they look at what has happened, what this trajectory has been -from more and
more job security to, now, the U-turn -knowledge will strengthen their own
mental health. And they will come up with actions, they'll begin to question
political candidates, they'll begin to look for responses in the people they
Laura Barcella: How have layoffs shifted depending on the political
landscape and who is in office?
Louis Uchitelle: I don't think it shifts at all. I think Republicans and
Democrats are almost identical in how they handle this. There hasn't been
any change at all. There was once a movement in this country to supplement
private sector jobs with public sector jobs. I don't mean moving dirt from
one side of the other to stimulate the economy. There's real needs out
there -for quality child care, for example, or public transportation
rebuilding schools, all sorts of things.
That might be one way of absorbing the excess people who cannot find good
jobs in the private sector. But they don't exist in sufficient quantity. I
also think it's a good idea for people to be as well-educated as possible
Although education, by itself, is not the solution.
Laura Barcella: You wrote that certain self-help treatises have wrongly
trained people to feel responsible for their own job security.
Louis Uchitelle: " Who Moved My Cheese?" is the famous book. It compares
two humans with two humanlike mice, and the "cheese" is the jobs. The mice,
as soon as the cheese disappears from its usual place, go out and start
looking for a new supply -whereas the humans sit there and moan and feel
sorry for themselves and hope that the cheese will come back. Finally, they
get their heads on straight and go out looking for another supply of cheese.
That's a little bit like saying, "Don't moan about losing your job! Get
yourself an education; do what you have to do. The cheese is out there; you
just have to figure out how to do it. And if you don't figure out how to do
it, it's your fault."
That message of "your fault" is devastating in this country. It's not that
we shouldn't be responsible -we should go to school. It's politically a lot
easier to put the responsibility on the victims rather than the politicians
or the unions taking on all the responsibility. We've acquiesced to layoffs
and outsourcing, and we've made it easy, and that greases the way for more
than is necessary.
Laura Barcella: Do you think the trend will continue?
Louis Uchitelle: I have no idea. The whole purpose of writing the book is
to influence what happens next, and not by some policy description, but
trying to give people a sense of trajectory and history and to remember that
job security has a long history in this country, and it still serves a
purpose. Maybe not in the old way, I'd be the last to argue that, but it
serves a purpose.
Laura Barcella is an associate editor at AlterNet.
Excerpt: The Disposable American
By Louis Uchitelle
AlterNet Posted on April 7, 2006
Excerpted from " The Disposable American" by Louis Uchitelle.
Several years ago, Donald W. Davis stopped making visits back to New
Britain, Conn. He felt shame for what had happened to the Stanley Works, the
city's largest employer, which he had led from 1966 to 1988 -from its best
days to the beginning of the layoffs and plant closings that, after he was
gone, finally reduced Stanley's presence in New Britain to a collection of
mostly empty factory buildings and reproachful former workers.
Davis by then no longer lived in New Britain. He had sold his Dutch Colonial
home, which he had painted a bright and optimistic yellow, and had moved
with his wife to Martha's Vineyard, where their summer house on seven acres
of rolling lawn became their main residence. It was an entirely different
setting, but the trip back to New Britain for visits was easy enough -less
than four hours by ferry and car -and Davis at first made it often. Like
many chief executives of his era, he had been deeply involved in the life of
the city that, in his day, had supplied thousands of Stanley's workers. He
had served on the board of education for many years and was its president
for a while. The six Davis children attended the public elementary schools.
But in the late 1990s, the visits home stopped. Meeting former Stanley
employees on the streets, in restaurants, at the YMCA, where Davis still
went to exercise, became too painful. "They just moaned about what was
happening to this great company," Davis told me. He had tried to share their
sadness, to distinguish his stewardship from the accelerated pace of layoffs
and the disregard for New Britain that had become so striking after he was
gone," as if he were a victim too. But he wasn't really. The people he
encountered had lost their jobs against their wishes, while he had retired
on schedule, a wealthy man. And he had, after all, initiated the layoffs. No
one blamed him, Davis maintained. But the encounters with former Stanley
workers became, as Davis put it, "much too personal." So he stayed away.
When we renewed our acquaintance a few years into his self-exile, I found a
restless, often passionate man, unable to put behind him his final years as
chief executive. At 81, still stocky and agile, he was grateful for good
health so late in life. Age showed only in his hair, which was pure white,
and in his eyes, which became tired and bloodshot in the late afternoon,
although when I suggested that we take a break in our conversation, which
had started in the morning and had continued through lunch at a noisy
seafood restaurant, he waved me off, intent on his recollections. He no
longer bothered with the suits and sports jackets of his CEO days, but he
did have on a white button-down shirt. He was running a leadership seminar
twice a week during the fall semester at the Massachusetts Institute of
Technology, where he shared a small, cluttered office with two other
Davis rarely canceled a class; the seminar he led became a last connection
to his former business world, a final public platform. Sitting in on a class
in the late afternoon, listening to him draw on his experiences from his
Stanley days, I imagined that beyond the 19 young people seated in the room,
he was speaking to all those he knew back home, explaining that he had done
as well as any executive could, in a very changed world, to preserve Stanley
as it was. And that could not be done.
The Stanley Works illustrates, as well as any Fortune 1000 company, the
accelerating deterioration of job security in America over three generations
of chief executives, a deterioration that Davis and his counterparts in the
first generation resisted for a while, reluctant to let go of the expiring
norms. So did their workers. For almost 90 years, from the 1890s until the
late 1970s, the thrust of American labor practices had been toward lasting
attachments of employers to workers and vice versa. There were lapses and
backsliding in those decades. Descriptions of labor practices during the
1921-22 recession, for example, are remarkably similar to labor practices
today. But the direction was toward job security, not away from it.
Efficiency seemed to require it. So did union power, government policies,
community expectations and social norms. Even the Depression, with its mass
unemployment, produced in reaction labor laws that in the post-World War II
years strengthened job security. We had decided as a people -managers,
politicians and workers -that job security had value, and in pursuit of that
value, we lifted ourselves out of insecurity. And then, starting about 1977,
midway through Davis' 21-year term as chief executive, there was a U-turn.
Over the next 20 years, the achieved job security disintegrated in the
United States. Layoffs were the medium. Each step in the disintegration was
a novelty and a shock. But the layoffs continued, and in 1984 the Bureau of
Labor Statistics began to count "worker displacement." By 2004, the bureau
had counted at least 30 million full-time workers who had been permanently
separated from their jobs and their paychecks against their wishes. Huge as
that number was, it did not include the millions more who had been forced
into early retirement or had suffered some other form of disguised layoff,
masking the magnitude of the problem. A more comprehensive survey would very
probably have found that 7 percent or 8 percent of the nation's full-time
workers had been laid off annually on average -nearly double the recognized
layoff rate. And the percentages crept higher as the years passed.
Davis remembers vividly the circumstances that brought on the U-turn. The
experience was, in his word, "traumatic." He awoke in 1979 to find that
customers for Stanley's hand tools were defecting in alarming numbers. The
lure was Asian tools. Once-shoddy socket wrenches, screwdrivers, claw
hammers, saws, levels, chisels, pliers and measuring tapes imported from
Asia had gradually become indistinguishable in quality from Stanley's
offerings at 60 percent of the price -a feat Davis and his counterparts in
many other industries had not anticipated.
Scrambling to respond, they cut prices and, hoping to preserve profits, they
began to cut labor costs, at first through attrition and then through
layoffs. Hundreds of other companies were caught in a similar experience.
>From then on, job security unwound in America. Layoffs became the measure of
our national retreat from the dignity that had been gradually bestowed on
American workers over the previous 90 years. What started as a necessary
response to the intrusion of foreign manufacturers into the American
marketplace got out of hand. By the late 1990s, getting rid of workers had
become normal practice, ingrained behavior, just as job security had been 25
That did not happen without resistance, particularly in the 1980s and early
1990s. Community groups, for example, tried to purchase and reopen shut
factories, the goal being to reemploy the working people who gave the
community its existence. The Roman Catholic Church joined in this endeavor
and issued two pastoral letters in the 1980s opposing job destruction. But
then the church fell silent, as did the communities, which disintegrated
without the steady jobs that had sustained them. Government regulation had
protected the jobs of nearly 13 percent of the work force, those employed in
airlines, trucking, public utilities, telephones, banking and railroads.
And then deregulation, starting with President Jimmy Carter, precipitated
endless reorganizations in those industries, and endless layoffs to
accommodate the reorganizations, until reorganization and layoff finally
became the norm. Organized labor also protested, but union membership and
power were already in decline, and after 1981, when President Ronald Reagan
fired and then replaced the nation's striking air traffic controllers,
strike activity in support of job security -or in support of any other
demand, for that matter -declined precipitously. The old assumption that a
worker out on strike had his job waiting once the strike ended was gone.
Just as layoffs began to be a source of national anxiety, mainstream
economic theory completed an about-face that in effect endorsed layoffs and
diminished the pressure on the nation's presidents and on Congress to
preserve job security. The dethroned way of thinking had recognized a
central role for government in protecting workers in a free market economy.
Entrepreneurial, hard-driving managers were essential to keep the economy
vibrant and growing. But they ran roughshod over workers unless they were
restrained by government rules and regulations, including rules that
strengthened labor's bargaining power. The marketplace would not provide job
security without pressure from government. That way of thinking, born in the
New Deal in the 1930s and greatly expanded over the next three decades, died
in the 1970s.
The new intellectual framework took the opposite view, and in so doing
validated what was already beginning to happen. Companies were freeing
themselves from the many obligations to their employees that had accumulated
over the years, and now mainstream economics blessed that endeavor. In the
process, government was depicted as an obstacle to prosperity. Unfettered
enterprises, the argument now went, would expand more rapidly and, over the
long run, share their rising profits with their workers, doing so
voluntarily through job creation and raises.
If that did not happen -and it did not happen for tens of millions of people
who lost their jobs -well, that was the fault of the job losers themselves.
They had failed to acquire the necessary skills and education to qualify for
the increasingly sophisticated jobs that were available. They lacked value
as workers. And the argument took hold. Sanford M. Jacoby, the economic
historian, citing a study typical of this period, noted that "workers with
at least some college education were more likely than less educated workers
to view fairness as 'recognition of individual abilities' instead of 'equal
treatment for all.'"
The new economic theory, making each worker responsible for his or her own
job security, interacted fatally with the actual layoff experience. Layoffs,
we are told, do not happen to people who are valued by their employers. The
layoff says that you have failed in your endeavors to improve your skills
and to be flexible, innovative, congenial and hardworking. The damage to
self-esteem from this message is enduring. It shows up frequently in people
who have been laid off, whether or not they work again, and yet it is
ignored in the political debate. Job creation and full employment are held
up by Democrats and Republicans, and nearly all the experts who advise them
on policy, as sufficient antidote. Putting the laid-off back to work in new
jobs solves the problem. There is income again and even prosperity, or the
potential for it. But mental health is not easily restored.
Psychologists and psychiatrists are just beginning to recognize that layoffs
chip away at human capital by eating at self-esteem on a mass scale. It is
like acid rain eroding the environment, according to Dr. Theodore J. Jacobs,
a professor of psychiatry at Albert Einstein College of Medicine and New
York University School of Medicine in New York. He says: "Even if a person
is accurate in saying, 'I did a really good job, and I can see that the
company is in a bad way, and they have to lay off a lot of people and it is
really not about me,' there is seldom an escape from the inner sense of 'Why
me?' In other words, one has some sense that one has failed, and the outside
world has made that judgment. And that self-perception dovetails with
existing inadequacies that many people feel about themselves."
The Great Depression was less damaging. Millions of people lost their jobs
then, but the majority blamed flaws in the market system, not in themselves.
They demanded that government fix the flaws. That collective response, which
helped to produce the New Deal, is missing today. Implicit in self-blame is
acquiescence to layoffs, now the American condition.
All this was still well in the future when Don Davis became chief executive
of the Stanley Works in 1968. Job insecurity in those days -at the Stanley
Works and most other manufacturers -went no further than the temporary
furloughing of blue-collar workers when sales weakened. The white-collar
staff -clerks, secretaries, salespeople -were not touched. "We thought of
them as part of management," Davis said.
But at the factory level, some workers would be told to stay home until
production picked up again, which it always did in those truly prosperous
years. Seniority dictated who was furloughed first, and in what order they
would be recalled, which they always were. "That was a very important thing,
that recall; it made people feel they still had this connection with
Stanley," Davis said. Seniority rights continued to accrue during the
stay-at-home period, and health insurance remained in effect. These were
Stanley's ways and the ways of many American companies.
The onslaught of imports starting in the late 1970s changed those ways. As
customers defected, sales plummeted and failed to bounce back. Nowhere was
that more on display than in the auto industry's struggle with Japanese
imports. But nearly every manufacturer was hit, and the steep recession in
1981 and 1982 compounded the damage. The old world has never returned. Visit
the tools department at Home Depot, which is Stanley's biggest single
customer, purchasing 12 percent of its annual output in 2004, and the array
of products shows Stanley painfully struggling to stand out.
The company's yellow and black colors still dominate the shelves where
measuring tapes are stacked, the clip-to-the-belt models whose steel blades
spool out across a room and quickly retract into stubby cassettes at the
click of a lever. Many of the claw hammers bear Stanley's name, and also the
scraper blades, the linoleum-cutting knives, and every variety of
saw -hacksaws, wood saws, keyhole saws, compass saws, pull saws. But even on
these shelves, the colorful tools of other companies are well-represented.
And the Stanley label no longer dominates the displays of socket wrenches,
screwdrivers, adjustable squeeze-handle pliers, levels, wood planes, counter
punches, chisels and bolt cutters. What all the tools have in common,
including Stanley's, is origin: The great majority are made outside the
United States, particularly in Asia.
Shifting manufacturing abroad was not in Davis's thinking in the late 1970s
and early 1980s. Struggling to prevent the imports from gaining a foothold,
he tried at first to bring down labor costs by shrinking the previously
sacrosanct white-collar staff, not through layoffs -that would not happen to
America's white-collar workers for a few more years -but by attrition. He
froze hiring and decreed that as white-collar workers resigned or retired,
those who remained would have to pick up the work of their departed
colleagues in addition to their own. "Wearing two hats," he called it.
The goal was a reduction of 600 employees over two years, or 15 percent of
the white-collar staff -a mild cutback by later standards, but worthy then
of a display of anguish. Davis and his second in command, the chief
operating officer, engaged in an exhausting tour of Stanley's plants,
concentrated then in the Northeast and Midwest. They divided them up, and at
each stop, one or the other explained to the assembled workers how the
company's survival had become the issue.
"We had a meeting of all the employees, salaried, white-collar, blue-collar,
management, everybody," Davis said, "and where that was too big a crowd,
we'd break it up into two or three groups. Then we'd have the night shift in
another group. And he or I spoke to each one of these groups about the
revolution that had taken place in competition, and how we had to respond to
it if we were going to survive as a major player."
The attrition worked. The white-collar staff shrank as planned. But it was
not enough cost-cutting, and Davis turned to his factory workers. For the
first time, he went beyond temporary furloughs into outright dismissal. He
also began -reluctantly, he insisted in old age -to shift some operations
from New Britain to lower-wage cities. As he did so, he figured out a
system, by trial and error, for handling layoffs with a minimum of backlash.
He even reduced the procedure to a checklist, and on the day I sat listening
in his classroom at MIT, he introduced that checklist to his 19 seminar
students, all selected because they seemed to have the potential to become
chief executives themselves.
"Let's say you are a plant manager of 400 people, and you are not going to
need most of them because of automation," Davis explained. "Our boss tells
you that the new machinery will arrive in three months and the switchover
has to be made without a breakdown in production. Your job as leader of this
group is to minimize the outcry and keep production going. What do you do?"
Several students raised their hands. Be honest with the workers about what
you are doing, one suggested. "Of course you explain to the workers," Davis
replied, impatiently, "but what about the politicians, the editor of the
newspaper, the union officials, the mayor -all the people who can accuse you
of messing up the town? You need a game plan for telling them, in just the
right order in advance of the public announcement, so that when they hear
the news later, they can say, yes, we knew. It takes the sting out of
layoffs." And he illustrated the point. You wait until just after the
newspaper's deadline to tell the editors, he explained, so they know in
advance but can't break the news to their readers ahead of the public
announcement. "Stanley had a whole timeline of people who had to be notified
and explained to if we had a significant layoff."
For all his regrets, Davis by the mid-1980s had clearly become skilled at
layoffs. He had bitten into the apple, if you will. "I was forced to get
used to layoffs," he told me. What he had begun, his handpicked successor,
Richard H. Ayers, an industrial engineer with a bent for efficiency,
accelerated. Ayers closed a huge distribution center in New Britain and
reopened it in Charlotte, N.C. -away from unions. Other operations also
moved south or overseas. Under Ayers, the merchandise Stanley sold in
America was increasingly not made in America. Sledgehammers and crowbars now
came from a Stanley plant in Mexico, socket wrenches from a company
purchased in Taiwan, a trickle of door hinges and latches from China, the
result of a new joint venture. Under pressure from Ayers, 200 workers who
made hinges for kitchen stoves accepted a wage cut of $2 an hour as a
condition for keeping the operation in New Britain. "I looked at this
process as being evolutionary," he said.
But Stanley's directors weren't satisfied. Ayers, they felt, was not moving
fast enough. So in 1997 they hired an outsider, John M. Trani, as chief
executive, luring Trani away from General Electric with a signing bonus of
one million Stanley stock options and a seven-figure annual salary package
two to three times greater than either Davis or Ayers had ever earned. And
Trani, who had won a name for himself at GE, excelling at the company that
invented the modern American layoff, did move faster.
Over the next six years, he closed 43 of Stanley's 83 factories. The total
payroll plummeted to 13,500 people from nearly 19,000. Some work was
outsourced to contractors; other operations were combined in one factory.
New Britain was a big loser in this shuffle. By the fall of 2002, the
payroll there had dwindled to 900 employees, a far cry from the 7,000 people
who had worked for Stanley in multistory brick factory buildings that
dominated the downtown when Davis joined the company in 1948 as a
27-year-old junior executive freshly graduated from Harvard Business School,
which he had attended on the GI Bill.
Not much besides the headquarters building is left in New Britain. That
building, strangely, is new, a modernistic, three-story structure put up by
Davis in 1985 in a wooded industrial park as a last, futile gesture of
loyalty to the city of Stanley's birth. In the fall of 2002, if you stepped
out of the elevator on the third floor, where Trani and his top executives
had their offices, against the opposite wall stood a wooden rolltop desk,
beautifully restored, a desk once used by Frederick T. Stanley, who founded
the company in 1843 in a workshop at the rear of his home in what was then a
Along another wall, portrait paintings of eight earlier chief executives,
each ornately framed, each man a stalwart in the civic life of the growing
industrial city, paid tribute to the illustrious past. The eight paintings
were lined up opposite the entrance to the chief executive's office, and as
Trani came and went, those long-gone chiefs peered out at him. Elsewhere
along the quiet carpeted halls were black-and-white drawings, in Norman
Rockwell style, of fathers and sons, circa 1930s, working serenely together
at home, fixing things with Stanley tools.
All this Trani made a point of ignoring, as if he had chosen corny,
anachronistic adornments so he could snub them, which he certainly did. He
is a chubby, tall, tightly scheduled man. He had an hour available in
mid-November that year, his administrative assistant had told me, and if
that did not work, January or February was the next available slot. I took
the hour in November and drove to New Britain. We met alone in a conference
room next to his office, sitting across from each other at a round, barren
table. He answered my questions fully. Nothing I asked fazed him. He was
very pleasant. But he did not permit our conversation to veer into a
discussion of alternatives to layoffs. There were no alternatives, he
insisted. "People who basically look at reality as it exists, without hoping
for it to change, and deal with the hand they are dealt, so to speak, they
are the successful ones," he said.
Reality for Trani at the outset of his stewardship meant sales revenue per
factory. As Trani tells the story, the first thing he did when he took over
in 1997 was to divide the total annual sales revenue ($2.6 billion that
year) by the number of factories. The outcome, $31 million in average sales
per factory, was too low, much lower than his main competitors. So he closed
factories left and right, particularly the ones with the highest
wages -i.e., in the United States -and by 2002 sales per factory were
approaching $55 million, even though sales revenue, the numerator in the
Trani equation, was still stuck at $2.6 billion. Too many competitors were
offering too many hand tools at cutthroat prices. Cost cutting, which meant
mainly labor cost cutting, was the only way out. "Layoffs and plant
closings," Trani explained, "are not such a rare event anymore that one
generally makes a big deal out of them."
He was equally casual about New Britain. He kept the headquarters there, he
said, only because a better opportunity elsewhere had not yet presented
itself. He emphasized the "yet." Given the opportunity to disparage the
hometown, Trani rose to the occasion, as if he wanted to burnish his image
as a rootless executive. He had recently been vilified in newspaper
editorials and media accounts for attempting to move Stanley's headquarters
of record to a post office drop in Bermuda to avoid $30 million a year in
U.S. taxes. The public exposure had forced him to cancel the plan, but he
was still defiant.
Several competitors had reorganized as Bermuda corporations and had gained a
competitive advantage, he told me. They had not been challenged by local
politicians as he was, one of the critics being Mayor Lucian Pawlak of New
Britain. "I understand that he does not like globalization," Trani said,
"but that's the way it is. The mayor thinks that Stanley owes New Britain
forever. Forever! We have discussions all the time. Nice guy. Great guy. But
he has a view that I think is so far from reality that it creates angst when
it does not necessarily have to be that way."
Davis and Ayers would never have belittled the mayor, or New Britain, so
openly. They see themselves, in hindsight, as incrementalists and Trani as a
CEO who does things "by overnight fiat," as Davis put it. They also see
themselves as more humane. They walked the factory floors, greeting workers
by name, asking after their families. Trani rarely hobnobbed. Not
surprisingly, he also abandoned the periodic dinners for workers celebrating
25, 30, and 40 years with the company, dinners that Davis and Ayers made a
point of attending. And yet, in the end, for all their disdain for Trani's
ways and his unseemly speed, they were not in disagreement with the outcome.
They accepted as probably healthy for Stanley's profitability the reduction
in the work force and in the number of factories. Trani, in effect, finished
what they had started.
Ayers in particular felt this. He noted, for example, that while Trani moved
most of the production of Stanley's retractable clip-to-the-belt tape rulers
from New Britain to a factory in Thailand, it was he, Ayers, who had
acquired the Thai factory in the first place. The same was true for steel
door hinges and latches. A staple of the Stanley product line, they were
once manufactured in a great variety of shapes and sizes only in New
Britain -and under Trani only in Xiolan, China, near Shanghai. Ayers started
up the Chinese joint venture that Trani embraced with unnerving speed,
employing a thousand people in Xiolan. In doing so, Trani closed a
decades-old hinge factory in downtown New Britain --the five-story building
is still shuttered -and laid off five hundred workers. He also shut a newer,
smaller hinge factory in Richmond, Virginia, that Ayers had started up.
Ayers, like Trani, had sought to lower labor costs, but more gradually. The
nonunion Richmond factory was an interim step.
Ayers, a slightly built, courteous, patient man, had moved more slowly, he
said, because for him a social norm existed that kept him in check, a norm
that disappeared on Trani's watch. The Thai factory, in the Ayers strategy,
would have made steel measuring tapes only for the Asian market, not for
American consumers. Selling those tapes in the United States, he felt, would
have offended customers, many of them carpenters and construction workers
who belonged to unions that campaigned against purchasing merchandise not
made in America. Hammers manufactured in China might be acceptable to these
workers, but not the retractable steel measuring tapes, a signature Stanley
"We had a very high user base in the unions," Ayers said, "and there was
still resistance on their part in the mid-1990s to imported products." By
the late nineties, however, the "Made in America" sentiment had dissipated.
Americans had become focused on quality and price, and uninterested in
origin. That a product was made abroad ceased to be a negative.
But even if Ayers had enjoyed a freer hand, he still would have held back on
layoffs. He simply did not have the stomach, he said, for the upheaval that
Trani thrived on. Much later, that was the justification he offered for his
early departure from Stanley in 1997 at age 55, still in his prime, only
three years older than Trani, his replacement. Soon Ayers, in retirement,
was shuttling between a summer home on a New Hampshire lake and a winter one
in Florida, devoting considerable energy to Habitat for Humanity, the
philanthropy whose volunteers, Jimmy Carter among them, build housing for
the poor with their own hands. Of his decision to retire, he insisted that
it was not Stanley's board of directors that threw him out, but his own
distaste for the work ahead. "I disliked the difficult decisions you had to
make in terms of their impact on people, and I knew there was more of that
coming," Ayers said. "I decided that it was time for someone else to do it.
I could not."
Davis to Ayers to Trani -the dismantling of Stanley's work force through
three generations of chief executives finally got to Diane Sirois. After 25
years she still worked for the company, at its last factory in New Britain
of any consequence, an elongated, two-story building where Stanley once made
all of the retractable measuring tapes that it sold in the United States,
millions of them each year. In 1995, Ayers had taken a stab at keeping most
of this manufacture in New Britain. He had spent millions on machinery to
automate the assembly process. When I visited that year, Diane was a
curly-haired 39-year-old climbing over the new machinery, which resembled a
Lilliputian railroad, the tracks only a few inches apart.
Small pallets, the Lilliputian equivalent of railroad flat cars, moved
slowly along the tracks, each bearing a partly assembled measuring tape. The
pallets halted briefly at automated stations to receive components: a black
plastic cap was welded to a reel at one stop, the spooled metal blade was
inserted at another, an outer casing was added at a third, the belt clip at
still another. There were several of these railroads. Each could be
reprogrammed to produce different models: the 30-footer, the 25-footer, the
16-footer. Only a handful of workers was needed to keep the machines
running. In 1995, however, men and women seated at workstations still
assembled many of the measuring tapes by hand. But Ayers assured me that
more railroads would be installed, as soon as funds were available to invest
in the contraptions.
As they arrived, hand assembly would be phased out. Production would remain
in America, but not as many jobs. The survivors would be those with enough
gumption to train for the automated assembly lines and then staff them,
responding like emergency workers when the various red beacon lights
installed along the lines flashed on, signaling a breakdown. Diane had
decided to be among the survivors. She liked new ventures, and the automated
railroad system required greater skill and ingenuity than sitting at a
worktable repetitively assembling steel and plastic parts into measuring
While we talked she gestured disdainfully at a group of assemblers seated
nearby. They were doomed, she said. But she was not. She had spotted a way
to immunize herself against layoff. Under Stanley's labor agreement with the
International Association of Machinists and Aerospace Workers, those
employees with the least seniority had to go first in a layoff, even if they
performed essential tasks. As they departed, colleagues with more seniority
were reassigned to their jobs. Sirois, with 18 years at Stanley then, was
vulnerable. One of those expressionless assemblers she had just belittled
could bump her.
But the contract had an out. While others balked at the training needed to
operate the new machinery, she had jumped at the opportunity, knowing that,
under the contract, she could be bumped by a colleague with greater
seniority only if that colleague could learn her job in a week. Diane had
needed three months of training to master the skills required to fine-tune
and troubleshoot the railroad. She did not think anyone could do it in less
time. "Job security is why I bid for this job," she told me then.
Visiting the tape factory seven years later, I walked through a building
that was a ghost of its former self. The second floor was almost deserted
and soon to be closed off entirely. In the mid-1990s it had bustled with
workers assembling tape measures by hand. So much was gone that Stanley no
longer invited Boy Scouts and civic groups to tour the plant. The tours
would be an embarrassment, Terry Christensen, the plant manager, explained.
Downstairs, not a nickel had been spent on more automation. The hand
assembly had nearly disappeared, but the Lilliputian railroad system had not
been expanded to replace the assemblers. That system had turned out to be
more breakdown-prone and less efficient than Ayers anticipated. But rather
than invest in better technology -better automation -John Trani eliminated
jobs in New Britain and shifted to hand assembly in Thailand, which now was
the focus of expansion.
Louis Uchitelle is an economics writer for the New York Times.
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