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<blockquote data-quote="Ricochet1a" data-source="post: 890116" data-attributes="member: 22880"><p><span style="font-size: 12px"><span style="color: #000000">Part 1:</span></span></p><p><span style="font-size: 12px"><span style="color: #000000"></span></span></p><p><span style="font-size: 12px"><span style="color: #000000">Companies always do whatever they can to maintain as much profitability as they possibly can – regardless of the prevailing national or local economic conditions. Youseem to have missed the part where the employees take all the consequences and the company still keeps on generating a profit. Employees don’t make waves because they are scared – they are scared when the macro-economy is doing well, in that they’ll be forced to look for work if they screw up; they are scared whenthe macro-economy is struggling due to fear of how long it will take to find other employment if they are chopped. The one thing the UPS-ers here are correct about is that Express employees are going to need to overcome their fear and start using their heads if they want better compensation – it is as simple as that. </span></span></p><p><span style="font-size: 12px"></span></p><p><span style="font-size: 12px"><span style="color: #000000">When it comes to “when to organize” – you have completely missed the boat yet again.Employees don’t feel compelled to organize when the national economy is doing well, since their employer most likely had to increased their compensation packages in order to maintain and recruit their workforce – thus employee satisfaction is relatively high. Employees feel scared regarding organizing when their compensation is being held stagnant while the national economy is struggling, since they believe that they’ll be put out of work if they make so much as a peep of dissatisfaction to the company. </span></span></p><p><span style="font-size: 12px"></span></p><p><span style="font-size: 12px"><span style="color: #000000">So when is the time to organize? If you aren’t already organized and are working a wage job, it is time to organize. Again, simple as that…</span></span></p><p><span style="font-size: 12px"></span></p><p><span style="font-size: 12px"><span style="color: #000000">If you choose to trap yourself in a “reality” that places you at the mercy of your employer (as vantexan has done), then there is nothing others can do for you; you have created your reality and despite how much you despise it, you live it. </span></span></p><p><span style="font-size: 12px"></span></p><p><span style="font-size: 12px"><span style="color: #000000">Like manyothers, you (vantexan) don’t understand the processes behind how organize labor operates, how it benefits it members and why organized labor can operate in ANY economic climate. I’ll try to be brief and as simple as possible…</span></span></p><p><span style="font-size: 12px"></span></p><p><span style="font-size: 12px"><span style="color: #000000">Let’s use an example of a recently organized workforce of a company that numbers 1,000 total employees, whose average compensation amount is $50,000 per employee per year. Competing companies have workforces that are compensated an average of $65,000 a year –which just happen to have unionized workforces. All these companies operate in the same economy, provide similar products or services and are virtually indistinguishable in terms of quality of product – they are all direct competitors. </span></span></p><p><span style="font-size: 12px"></span></p><p><span style="font-size: 12px"><span style="color: #000000">The company employees which just have recently organized have had their requests for change in compensation and working conditions gathered and their union has analyzed the business model of the company in question and determined that an increase of compensation of $10,000 per year per employee is possible (total increase of labor cost to the company of $10,000,000 per year). </span></span></p><p><span style="font-size: 12px"></span></p><p><span style="font-size: 12px"><span style="color: #000000">And yes,unions have MBAs, accountants and specialists in business planning and finance to determine exactly just how much can be asked for, and how much is too much. </span></span></p><p><span style="font-size: 12px"></span></p><p><span style="font-size: 12px"><span style="color: #000000">The union has put forth its demands, and the company has to make a decision – whether or not to accept the demand or to lock out the workforce. </span></span></p><p><span style="font-size: 12px"></span></p><p><span style="font-size: 12px"><span style="color: #000000">The company is faced with the following costs:</span></span></p><p><span style="font-size: 12px"></span></p><p><span style="font-size: 12px"><span style="color: #000000">1) Recruitment of replacement employee - $5,000 average cost per employee. This is due to advertising, screening, recruitment, interviewing, testing. Not every applicant is hired, so there is definite cost to get a replacement.</span></span></p><p><span style="font-size: 12px"></span></p><p><span style="font-size: 12px"><span style="color: #000000">2) Training –With all work there is specialized training needed in order for someone to be capable of operating with some degree of efficiency. Let’s assume $5,000 to train a new employee to be marginally productive.</span></span></p><p><span style="font-size: 12px"></span></p><p><span style="font-size: 12px"><span style="color: #000000">3) Experience– New employees are able to operate to a certain degree of performance, but their productivity will take time to reach the level of a seasoned employee.This decreased productivity cost the company $10,000 over the course of the new employee’s first year of employment, and $5,000 during the second year of employment – after that time they have reached full productivity capability. </span></span></p><p><span style="font-size: 12px"></span></p><p><span style="font-size: 12px"><span style="color: #000000">4) Attrition –The company has a natural turnover rate of 5 years. The average employee will stay with the company for 5 years before they leave. This means that with a workforce of 1,000 employees, the company will replace 200 employees a year –for a total annual cost of ($25,000 times 200), $5,000,000. This is already part of the cost of doing business, and is a cost already accounted for within the business plan. </span></span></p><p><span style="font-size: 12px"></span></p><p><span style="font-size: 12px"><span style="color: #000000">So the company is looking at an increase of its labor expense of $10,000,000 per year if they agree to the union demand, or will need to lockout the union and begin looking to replace its workforce. There is a game of “chicken” that will go on, the company hoping that the union can be broken, while the union hopes the company fears loss of profit more than signing the contract. </span></span></p><p><span style="font-size: 12px"></span></p><p><span style="font-size: 12px"><span style="color: #000000">What is the cost to the company to have a lockout and replace its workforce of 1000 employees? </span></span></p><p><span style="font-size: 12px"></span></p><p><span style="font-size: 12px"><span style="color: #000000">1) It costs the company $25,000 per employee to get someone off the street and up to speed, multiplied by 1,000 employees - $25,000,000 to replace the workforce. </span></span></p><p><span style="font-size: 12px"></span></p><p><span style="font-size: 12px"><span style="color: #000000">2) The company will lose profits during the time between the lockout starts and the replacement workforce is in place – let’s assume $15,000,000 as the annual profit margin, 4 months of lost business activity - $5,000,000 in lost profits due to having a lockout and replacing the workforce. </span></span></p><p><span style="font-size: 12px"></span></p><p><span style="font-size: 12px"><span style="color: #000000">3) The company will lose goodwill with its customers due to the inability to provide its product and negative publicity for having a lockout. An intangible cost, but calculated at $5,000,000 the moment a lockout is done. </span></span></p><p><span style="font-size: 12px"></span></p><p><span style="font-size: 12px"><span style="color: #000000">4) Loss of market share…. The company will lose market share to its competitors as aresult of a prolonged inability to provide its product. This will result in the loss of $5,000,000 in profits the first, year and $3,000,000 in profits the second year after a lockout. A cost of $2,000,000 will also be incurred in increased public relations expenses, advertising, price breaks and other attempts at restoring pre lockout market share to restore full profitability by the third year after a lockout. Total cost here is $10,000,000. </span></span></p><p><span style="font-size: 12px"></span></p><p><span style="font-size: 12px"><span style="color: #000000">Total cost to the company to have a lockout: $45,000,000</span></span></p><p><span style="font-size: 12px"></span></p><p><span style="font-size: 12px"><span style="color: #000000">Cost to the company to agree to the union demand: $10,000,000 per year</span></span></p><p><span style="font-size: 12px"></span></p><p><span style="font-size: 12px"><span style="color: #000000">Profitability (pre-unionization): $15,000,000 per year</span></span></p><p><span style="font-size: 12px"></span></p><p><span style="font-size: 12px"><span style="color: #000000">So you might be thinking, “Go ahead and have a lockout, the company would make back its cost of the lockout after 4.5 years and everything after that is gravy”. What makes you think that the replacement workforce wouldn’t unionize in time and place the company back into the same position, creating an ongoing cycle of lockouts and replacements every few years?</span></span></p><p><span style="font-size: 12px"></span></p><p><span style="font-size: 12px"><span style="color: #000000">You might then think,“Well, if the company pays out an additional $10,000,000 per year in labor expense, their profitability will decrease to $5,000,000”. That would happen if the company continued to operate as it did pre-unionization. The company would naturally trim salaries of non-wage employees (and yes, it IS an “us versus them” situation), would trim support staffs, cut perks and benefits for top executives, extend the service utilization of equipment and manage other expenses with close scrutiny (the party is over). Profitability would jump from a pre “reorganization” business model/post unionization of $5,000,000 per year, to $7,500,000 per year. Definitely less than what they were making before, but still profitable.</span></span></p></blockquote><p></p>
[QUOTE="Ricochet1a, post: 890116, member: 22880"] [SIZE=3][COLOR=#000000]Part 1: [/COLOR] [COLOR=#000000]Companies always do whatever they can to maintain as much profitability as they possibly can – regardless of the prevailing national or local economic conditions. Youseem to have missed the part where the employees take all the consequences and the company still keeps on generating a profit. Employees don’t make waves because they are scared – they are scared when the macro-economy is doing well, in that they’ll be forced to look for work if they screw up; they are scared whenthe macro-economy is struggling due to fear of how long it will take to find other employment if they are chopped. The one thing the UPS-ers here are correct about is that Express employees are going to need to overcome their fear and start using their heads if they want better compensation – it is as simple as that. [/COLOR] [COLOR=#000000]When it comes to “when to organize” – you have completely missed the boat yet again.Employees don’t feel compelled to organize when the national economy is doing well, since their employer most likely had to increased their compensation packages in order to maintain and recruit their workforce – thus employee satisfaction is relatively high. Employees feel scared regarding organizing when their compensation is being held stagnant while the national economy is struggling, since they believe that they’ll be put out of work if they make so much as a peep of dissatisfaction to the company. [/COLOR] [COLOR=#000000]So when is the time to organize? If you aren’t already organized and are working a wage job, it is time to organize. Again, simple as that…[/COLOR] [COLOR=#000000]If you choose to trap yourself in a “reality” that places you at the mercy of your employer (as vantexan has done), then there is nothing others can do for you; you have created your reality and despite how much you despise it, you live it. [/COLOR] [COLOR=#000000]Like manyothers, you (vantexan) don’t understand the processes behind how organize labor operates, how it benefits it members and why organized labor can operate in ANY economic climate. I’ll try to be brief and as simple as possible…[/COLOR] [COLOR=#000000]Let’s use an example of a recently organized workforce of a company that numbers 1,000 total employees, whose average compensation amount is $50,000 per employee per year. Competing companies have workforces that are compensated an average of $65,000 a year –which just happen to have unionized workforces. All these companies operate in the same economy, provide similar products or services and are virtually indistinguishable in terms of quality of product – they are all direct competitors. [/COLOR] [COLOR=#000000]The company employees which just have recently organized have had their requests for change in compensation and working conditions gathered and their union has analyzed the business model of the company in question and determined that an increase of compensation of $10,000 per year per employee is possible (total increase of labor cost to the company of $10,000,000 per year). [/COLOR] [COLOR=#000000]And yes,unions have MBAs, accountants and specialists in business planning and finance to determine exactly just how much can be asked for, and how much is too much. [/COLOR] [COLOR=#000000]The union has put forth its demands, and the company has to make a decision – whether or not to accept the demand or to lock out the workforce. [/COLOR] [COLOR=#000000]The company is faced with the following costs:[/COLOR] [COLOR=#000000]1) Recruitment of replacement employee - $5,000 average cost per employee. This is due to advertising, screening, recruitment, interviewing, testing. Not every applicant is hired, so there is definite cost to get a replacement.[/COLOR] [COLOR=#000000]2) Training –With all work there is specialized training needed in order for someone to be capable of operating with some degree of efficiency. Let’s assume $5,000 to train a new employee to be marginally productive.[/COLOR] [COLOR=#000000]3) Experience– New employees are able to operate to a certain degree of performance, but their productivity will take time to reach the level of a seasoned employee.This decreased productivity cost the company $10,000 over the course of the new employee’s first year of employment, and $5,000 during the second year of employment – after that time they have reached full productivity capability. [/COLOR] [COLOR=#000000]4) Attrition –The company has a natural turnover rate of 5 years. The average employee will stay with the company for 5 years before they leave. This means that with a workforce of 1,000 employees, the company will replace 200 employees a year –for a total annual cost of ($25,000 times 200), $5,000,000. This is already part of the cost of doing business, and is a cost already accounted for within the business plan. [/COLOR] [COLOR=#000000]So the company is looking at an increase of its labor expense of $10,000,000 per year if they agree to the union demand, or will need to lockout the union and begin looking to replace its workforce. There is a game of “chicken” that will go on, the company hoping that the union can be broken, while the union hopes the company fears loss of profit more than signing the contract. [/COLOR] [COLOR=#000000]What is the cost to the company to have a lockout and replace its workforce of 1000 employees? [/COLOR] [COLOR=#000000]1) It costs the company $25,000 per employee to get someone off the street and up to speed, multiplied by 1,000 employees - $25,000,000 to replace the workforce. [/COLOR] [COLOR=#000000]2) The company will lose profits during the time between the lockout starts and the replacement workforce is in place – let’s assume $15,000,000 as the annual profit margin, 4 months of lost business activity - $5,000,000 in lost profits due to having a lockout and replacing the workforce. [/COLOR] [COLOR=#000000]3) The company will lose goodwill with its customers due to the inability to provide its product and negative publicity for having a lockout. An intangible cost, but calculated at $5,000,000 the moment a lockout is done. [/COLOR] [COLOR=#000000]4) Loss of market share…. The company will lose market share to its competitors as aresult of a prolonged inability to provide its product. This will result in the loss of $5,000,000 in profits the first, year and $3,000,000 in profits the second year after a lockout. A cost of $2,000,000 will also be incurred in increased public relations expenses, advertising, price breaks and other attempts at restoring pre lockout market share to restore full profitability by the third year after a lockout. Total cost here is $10,000,000. [/COLOR] [COLOR=#000000]Total cost to the company to have a lockout: $45,000,000[/COLOR] [COLOR=#000000]Cost to the company to agree to the union demand: $10,000,000 per year[/COLOR] [COLOR=#000000]Profitability (pre-unionization): $15,000,000 per year[/COLOR] [COLOR=#000000]So you might be thinking, “Go ahead and have a lockout, the company would make back its cost of the lockout after 4.5 years and everything after that is gravy”. What makes you think that the replacement workforce wouldn’t unionize in time and place the company back into the same position, creating an ongoing cycle of lockouts and replacements every few years?[/COLOR] [COLOR=#000000]You might then think,“Well, if the company pays out an additional $10,000,000 per year in labor expense, their profitability will decrease to $5,000,000”. That would happen if the company continued to operate as it did pre-unionization. The company would naturally trim salaries of non-wage employees (and yes, it IS an “us versus them” situation), would trim support staffs, cut perks and benefits for top executives, extend the service utilization of equipment and manage other expenses with close scrutiny (the party is over). Profitability would jump from a pre “reorganization” business model/post unionization of $5,000,000 per year, to $7,500,000 per year. Definitely less than what they were making before, but still profitable.[/COLOR][/SIZE] [/QUOTE]
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