Corporate restructuring and employment flexibility Chapter 12

1. Corporate restructuring and employment flexibilityChapter 12 by Line Steenberg and Christelle Schamber January, the 9th 2008 Roger Hayter: The factory, the firm and the production System

2. Introduction • 1950’s-60’s = long boom of fordism  period of sustained growth (MNCs domination) • Early 70’s = volatile global economy  restructuring of technology, production, organization, markets, location and employment • Corporate restructuring is a search for “flexibilities”, especially employment flexibility

3. Contents • Corporate dimensions of restructuring • New locations and flexible workforces • In situ change and flexible workforces • Conclusion: the illusion of the spatial division of labour

4. I. Corporate dimensions of restructuring • 1970’s: winds of economic change • New technologies: CAD, CAM, NC • Create new products (markets more volatile, competitive and differentiated) • Japan: not based on low labour costs but in the nature of production organisation • Western economies and firms: competitiveness • Large-scale lay-offs • Core as well as peripheral regions • Exple : UK 1976-81 • By the mid-1990’s: recession, downsizing(Exple: GM)

5. In recessionary situations of declining market performance and competitiveness, firms have traditionally sought to reduce costs, especially labour costs (Frederiksson and Lindmark 1979) • Restructuring processes • Fordist firm • More competitive economy of the ICT techno-economy

6. The interrelated faces of restructuring • Restructuring = lower costs, enhance productivity, improve market position • Multiple dimensions (restructuring plans differ among corporations): • Labour • Reduce costs  lay-offs • Increase productivity intensifying work practices • Production and technology • Close down facilities, rationalization • Alternative: introduce new technology (CAD-CAM) • Organization • Restructure operations by vertical disintegration (contracting-out…) • Joint-ventures, strategic alliances • Product Markets • Shift towards more valuable, design intensive, higher quality pdts • Shift towards higher income market areas • Relations between the various dimensions of restructuring depend from corporation to corporation • Successful or not : many faces, many case studies (GM, Ford, IBM)

7. Core firms and segmented labour • Neoclassical vs. dual labour or segmentation theory • Segmentation • Dynamic • Variation from place to place • Taylorism = scientific management (20th) • Fordist-Taylorism vs. Flexible principles labour market segmentation (80’s)

8. Labour markets in the fordist firm :seniority + job demarcation Doeringer and Piore (1971)

9. Labour segmentation in the flexible firm Atkinson 1985,87 UK

10. Flexible labour and geographical strategies • To create a flexible labour force • Two basic geographical strategy • New location strategy • In situ strategy • Two polar strategies • Emphasize the creation of core workforces • Emphasize the creation of peripheral workforces • Reality is more complicated • Not easy to distinguish the different types of flexibility (new locations with functional or numerical/financial flexibility; in situ with functional or…) • Flexibility designed to ensure that workers are always working, but there is not always enough skills when tasks are simple

11. II. New locations and flexible workforcesImportance of women Women are often more attractive to companies due to: • Lower wages • Often they are not unionized • Easier to control women • These women are mostly within the secondary sector

12. Married women • After the second world war women wanted to return to the labour market • Growth and low unemployment rates created a need for female labour force • Supplement family incomes • Women as an important location factor: • When firms move to the suburb they are able to find cheap labour force • When located in the suburb it is easier to attract women labour force

13. Spatial entrapment hypothesis • Focus on the women in the suburbs • Women prefer to work close to their homes in stead of high income • Women find jobs after choosing where they want to live • Women are spatially entrapped within specific labour markets and within specific societies • Other studies: England (90ies): be careful of generalizing because of too many variations

14. Single women • Focus on developing countries and the female labour force available there • Female workers in the export processing zone • Young, single women that are often not protected by unions • Bad working conditions and extremely low wages • Immediate productivity • Temporary workers – easy to replace

15. Child labour • Developing countries (India and China) • Reason for high level of child labour: working of parent’s loans • Employed by government and MNC (often through subcontracting) • Nike’s off-shore leaps: • Numerical and financially flexible labour by subcontracting to regions with low wages • Japanese manufacturer through partnerships • Has developed a flexible system where minimizing cost but still keeping a good quality

16. III. In situ change ans flexible workforces • Employment flexibility easier in new locations

17. The Chemainus sawmill • Struggle at existing sites to shift towards more flexible operating cultures • Close a mill and replace it with a new one at the same location – new principles

18. The Powell River papermill: • In case of employment downsizing bargaining over flexibility between firms and unions is necessary • In the 80ies employment conditions kept falling and jobs were lost. Still there was increase in productivity. • Four main point for difficulties in flexibility: • Flexibility will always be contentious and unions will fight for seniority and no wage competition • Formal negotiations between the firm and union are important. If lowering conditions the firm needs to offer something else in return • Changes towards more flexibility can affect the trust, moral and effectiveness of the workers • Not all workers have the qualifications for more flexible operating cultures. Training the workers and replacement of workers are time requiring

19. Maintaining peripheral work forces In situ change • Decline in union power increases the flexible workforce • Communities without union traditions often have low wages and good possibilities in increasing flexibility • Kitchen knife manufacturer: low wages, young non-unionized female labour force and almost no job training

20. Skill formation of peripheral work forces: • In developing countries skill formation sometimes occur which calls for a flexible labour force. • Wages going up is a sign of increasing demand for labour force – limits off-the-job-training • Advantages in skill formation of workers through on-the-job-training: • Productivity will be bigger than sending workers to off-the job training • Workers will be capable of handling both routine problems and new changes • The intellect of the workers will increase according to the Enterprise Specific Skill Formation figure

21. Conclusion: the illusion of the spatial division of labour • The spatial division of labour is a problematical concept • Corporate restructuring can involve a variety of forms • Employment flexibility is developing along different lines in the same place and between places • Reality is always more complex than theory

22. Thank you for your attention ! ! ! Questions ?