The U.S. governments Cash for Clunkers program is proving effective in helping American automakers from the recession. As many as 390,000 applications have come in since the programs launch less than a month ago. Buyers of fuel-efficient new cars qualify for cash payments of up to 4,500 U.S. dollars per vehicle for trading in their aged gas-guzzlers. Korean and Japanese models are sitting high on the list of popular cars, fueling criticism that only foreign automakers are benefiting from the program. The top seller on the U.S. market, however, is the compact Ford Focus, while General Motors Chevy Cobalt has also seen sales surge.
Making the most of this trend, GM is increasing production by raising the number of staff on duty, offering overtime, rehiring 1,350 staff who were temporarily laid off, and delaying plant closures. The company laid off 7,000 employees early this year, and was set to cut 35 percent of its executive population and thousands of additional staff. Overtime work was common when the economy was booming, but GM has offered little of it over the past several years. Its workers are now about to receive handsome paychecks thanks to overtime.
GM is about to rehire 800 employees at its plant in Rose Town, Ohio, and 550 in the one based in Ingersoll, Canada. The Rose Town plant has experienced heaven and hell since last summer. When compact vehicles gained immense popularity due to soaring oil prices, the plant ran three shifts a day. After new car sales plunged, however, it had to cut back to one shift daily. GM can control the number of employees flexibly because temporary layoffs are normal at U.S. companies. The first to be let go in layoffs is newer staff but laid-off workers are usually rehired when the economy recovers. The order of staff to be rehired is often fixed in advance according to type of duty. If new car sales decline again in the coming months, the number of jobs at GM will also temporarily decline in tandem.
In contrast, large Korean companies cannot control the number of staff according to changing economic conditions due to union resistance. Certain companies offered voluntary retirement for staff by granting severance pay in economic down times. GM-Daewoo Auto and Technology, however, has been the only company in Korea to use a temporary layoff system, as it did from 2001 to 2006. Korean workers are more likely to join extreme labor activities to keep their jobs if no alternatives other than layoffs exist. Had Ssangyong Motor had flexible employment measures such as temporary layoffs in advance, labor and management could have prevented mounting collateral damage as a result of extreme strikes.
Editorial Writer Hong Kwon-hee (firstname.lastname@example.org)