Job cuts at the automakers grab the headlines, but one might say that the real impact around the midwest has been
felt by those who work at suppliers. The ruthless cost-cutting that’s being pushed down the supply chain usually ends
up focusing attention on labor costs (direct and indirect), even for those products where a high labor content isn’t an
inherent feature of the part. The solution tends to be the same across the industry; instead of focusing on reducing
labor costs through product design and process innovation, a bandaid is applied by moving production offshore. I
somehow doubt that the founding fathers of this country’s Industrial Revolution would be impressed. That’s why I was so
delighted to read the Tom Walsh column that I’ve linked below.
Shannon Precision Fasteners is able to pay its workers a living wage (one that would actually allow them to purchase
the new vehicles that use their products), and it’s heavily investing in capital equipment that provides additional
jobs and provides immunity from rising costs in so-called low-cost markets. Labor costs are being held down via the use
of 401(k) retirement plans and Health Savings Accounts. I’m on board with that concept, as long as the pay is
sufficient to allow adequate contributions to those funds, and I have to believe that making $20/hour with some
discretion as to where that money goes sure beats $9.50/hour with crappy health insurance and a pension fund that may
disappear at any moment.