This is sort of a rant but also a serious question.

This morning cnn has a headline about a business owner who is seeing business pick up at his factory but is having trouble hiring skilled workers to do the work. It seems he laid off half his staff over the last few years.

It seems like this is a story of "what goes around comes around." Businesses laid people presumably assuming those people would just sit around and starve until they were offered their jobs back in a few months. But many or most of those people moved on, went back home, improved their skills through education, retired, or whatever and no longer want to work in the same field. I mean, what did these business owners expect?

So now they whine about not being able to find skilled labor. Duh! They did their best to destroy the skill pool over the last few years. I just have no sympathy for them!

So, the question is, how do we keep this kind of thing from happening next time around?

Free training for skills in high demand on the local level, specifically targetting high school graduates, recently discharged military personnel, immigrants, and people currently on unemployment.

I have never worked in a factory, but Id assume that the skilled trades needed can be learned in one year or less.

If you could get the factory owners to pay for the training, even better. The important thing would be to keep the curriculum updated to include the most in demand skills of the moment.

Yeah, but I was thinking about the attitude the business owners have. They cut their workers then wonder why they won't come back. Yet we didn't see many business owners tearing down buildings they weren't using at the moment. They recognized they might need those so they paid the carrying cost. Well guess what guys, maybe if you had carried a few workers through teh tough times you wouldn't be in such a bind now!

How does this differ from the way stockholders view shares? If a company has a bad quarter, the stockholders bail and the share price plummets. I'm not saying that this is right; in fact I think that this is the problem with our system: it rewards short-term performance more than it rewards long-term performance.

I'm just saying that the fact that companies live and die by quarterly results drives them to cut costs quickly when business is bad. Companies are essentially driven to maximize short-term results at the expense of long-term results. Shareholders essentially will sell shares when things look bad and repurchase shares when things look better. For better or worse, companies are unable to do that with the work force for the reasons you mentioned.

It's not really any different. And I agree that short term focus is a problem...or at least it is the reality.

And I'm all for free enterprise. I am in no way suggesting we regulate this kind of thing.

I just find it hard to pity these guys now. If they had gone around and burned down all their factories to avoid the property tax for a few years while they were idle then no one would feel sorry for them. But the fact that they burned their workforce and are now finding it hard to replace it just doesn't bring any tears to my eyes.

Totally agree with you but (and this is in the case of publicly held companies) what choice did they have, given the current focus on "shareholder value?"

Some companies held onto their staff even as their profitability plummeted. Remember Nortel? RIM? Heck, even Microsoft just posted their first quarterly loss ever.

Companies who hang onto costly staff in the name of "long term gain" must be wary of the possibility that there is no long term. Carrying staff costs a ton of money.

Not really on topic, but Microsoft's "loss" should be qualified given the entire loss was due to a "charge off" from a company they acquired several years ago. Without that accounting entry, they made a ton of money. I believe they had record revenue that quarter.

But I agree with your point

German unions and employers (companys like Siemens) have made a deal giving staff life time guaranteed employment against promise that staff will go down to 60-80% (time and money) with short notice in situations where demand/production goes down. I see a clear risk that this in the long run hurt the creative process of the economy, making people stay on a safe job in a non competetive industry untill the very end instead of hury the process by leaving early for something more competetive and better paying.

In Sweden truck manufacturer Volvo and Scania made people work 4-day weeks with 80% of salary - even Scanias CEO did this (ad hoc, with no promise of life time emploiyment) during shorter time in financial crisis 2008-2009. They have also been educating staff during slumps, and giving them lower salary during the time they study. Booth companys keep a constant "pool" (something like 5-10%) of hired personal/consultants that can be layed off with short notice. Such temporary positions might be easy to get for young people, and a way to learn a trade I imagine.

I worked for a small business where the owner did everything he could to maintain his staff, cutting hours and reducing expenses. The problem was that the company was losing so much money, he was paying our salaries out of his personal money, not company money. I'd imagine this is not a rare problem for small business owners in a bad economy.

Side note, the lack of "skilled workers" as a barrier to hiring is a phrase that drives me crazy. Train people! Or increase the pay you are offering. Don't be shocked that people aren't banging down the door to work at a job that is offering $12/hr for a position that requires a college degree and 5 years of experience (I'm looking at you analytical chemistry jobs).

In America CEO's are often fired when the company doesn't perform and are guaranteed money with golden parachutes (millions of dollars to leave). Take HP for example. In 2010 HP CEO Mark Hurd was shown the door after an investigation into his questionable behavior and walked away with $12 million. He also supposedly contributed to the hiring of the new HP CEO Leo Apotheker who walked away with $25 million after less than a year’s service. Meg Whitman who took over as CEO in 2012 was offered $16.5 million in company stock to take the big job at HP.

A retail company I worked for made a majority of employees go part-time for about 6-9 months. Did any of the company officers take a pay cut? Nope. Did they still receive bonuses? Yes. In another company I worked for executives were offered early retirement with generous bonuses while the average workers who were laid off were offered next to nothing. Yet the same company claimed we needed to cut costs. Executives are overpaid and often are disconnected from the reality of the day to day operations that make companies successful.

American Airlines had the same thing happen – In 2003 AA pilots and flight attendants were asked to take pay cuts, give up sick time, and give up vacation accrued while executives received bonuses in the amount of nearly $300 million from 2003-2009. In 2003, AA disclosed that it had given bonuses to executives in the amount of nearly $300 million after negotiating a one billion reduction in costs with AA unions. CEO Don Carty lost his job over the debacle. The new AA CEO Gerard Arpey was offered by the board in 2010 6 million in compensation. Keep in mind AA filed bankruptcy in 2011 as it could not show a profit. Yet Southwest Airlines, arguably one of the more profitable companies in the airline industry, CEO Gary Kelly received a total of $3.4 million in 2010.

Bankrupt Kodak recently in April of 2012 wanted an exception granted for the bankrupt company to pay management $13.5 million in bonuses. Wow.

Of course, not every company leadership is like that. In June of 2012 Sony executives took pay cuts and returned bonuses. Fannie Mae and Freddie Mac leadership scored $100 million in tax dollars in pay packages for executives even as the companies were bailed out by the U.S. government in 2011. In April 2012 U.S. Department of Treasury ordered GM executives to freeze their salaries or even take a pay cut. GM currently owes the U.S. Treasury $25 billion dollars. AIG and Ally Financial executives were also ordered to take pay cuts in April 2012 by the U.S Treasury. AIG owes about $50 billion while Ally Financial owes about $12 Billion. Panasonic forced executives to take a pay cut in April of 2012. Today in May 2012 both Fannie Mae and Freddie Mac announced CEO’s will not receive the same packages and the jobs will include pay cuts for executives.

Eagle
The difference is wether a company is owned by "blind capital" and controlled by "company men", or owned and controlled by owners of flesh and blood. Me and my kids own shares in a investment company started some 60-70 years ago as a housebuilder, and then turned in to an investment company by the son of the founder. He is now a careful and very present CEO with a salary of about $15.000-20.000 a month (and get >$200 million a year dividend). His vision is "endless"; his daughters is going to take over in a decade or so and I guess he hopes his grandchildren will take over in 40-50 years... They are responsible and frugal with company money. Company cost is like 0,1-0,2% of the money they manage.

The massive growth of mutual funds is not all for the best I guess...

Not only that - but look at some job ads. They want 2-5 YEARS of experience for what they call an "entry level" position. AND at least a bachelor's degree (some will even ask for some graduate coursework!!!) We aren't talking super difficult professions - this is for mail runners and receptionists - those positions people used to jump into straight out of high school so they could work their way up (remember that? I don't.)

We don't have a lack of skilled workers (outside of certain specialty professions), we have employers with insane demands.

Yes, but one problem is that people straight out of high school used to be able to do simple math (like adding up receipts to process expense reports) and write a complete sentence (like responding professionally to an email.) The overall caliber of high school graduates has gone down so much over the last 20 years that companies want a bachelor's decree even for a receptionist just so that they are assured they have the basic skills!

You can blame HR departments and company policies. Instead of hiring quality people and training them/fitting them into an available job, companies hire people who allegedly have narrowly defined skill sets. Much of the time, this means that the only way a company can find a "skilled worker" is to take that worker from another company. The best companies dont let their workers go very easily, so you end up with 1000s of people wanting a job, and a company claiming it cant find anyone to fill the position.

Being in IT, I can tell you countless stories of a company being thwarted by its own HR dept in hiring someone. Like insisting a new programmer have X years of experience with with a specific programming language, even though languages evolve over time and knowing VB from 10 years ago is completely useless if programming in VB.Net today. Yet, HR depts will insist on asking how many years of VB experience, not just programming experience.

Companies are required to filter through HR depts, though, to avoid discrimination lawsuits(sometimes rightfully so, usually not).