The Impact Of The Declining U.S. Auto Industry On Staffing Industry
April 6th, 2009 | 
“Long-term commitment to new learning and new philosophy is required of any management that seeks transformations. The timid and the fainthearted, and the people that expect quick results, are doomed to disappointment.” — Dr. William Edwards Deming
In a nutshell, the above statement characterizes what is wrong with the American automobile industry, and why we are losing market share to the Japanese.
It’s amazing to think that Japan, a country that was bombed almost to oblivion in the Second World War, would come back in just a few decades to be a fierce economic rival. What’s even more amazing is that it is to a great extent attributable to one man –an American statistician named William Deming.
After WWII, when Japan was trying to rebuild their shattered economy, they enlisted the help of Dr. William Deming, who had just come up with the 14 principles of quality. Deming theorized that committing to producing high quality products, instead of focusing on producing in large quantities, would actually reduce production costs. Lower production cost maximizes profitability, while high quality products help increase market share.
Sounds like a great plan, right? Well, the Japanese agreed with Deming and immediately started implementing Deming’s ideas. On the other hand, when Deming tried to sell his ideas to American manufacturers, he was dismissed as a quack. Clearly a prophet is not appreciated in his own home! Americans are obsessed with short-term goals. How soon can we recoup our investment? How soon can we make a profit? We want quick results, instant gratification.
Over the years, the Japanese built a reputation for building high quality, affordable cars. Sales were low at the beginning, but they persevered and won the public relations war on quality. American automakers made tremendous sales in the ‘50’s, ‘60’s and ‘70’s by compromising on quality, and churning out millions of cars, but they were gradually losing the quality perception war to the Japanese.
Which brings us to the present-day disaster that we are facing in the American auto industry. Not a day passes without hearing on the news or reading in the papers about yet another mass layoff at an auto manufacturing plant. The Big 3 are shutting down plants across America, crippling local economies and stretching local and state budgets to the limit from decreased tax revenues and increased unemployment benefits payouts.
While we hear about the smaller companies that are dependent on the Big 3 –parts suppliers, and service providers – we hardly hear about the impact on the Staffing Industry. The impact on the staffing industry may not be broadcast on nightly news, but it’s, nevertheless, there.
In recent years, the Staffing Industry has generally outpaced the general economy in growth, with 2007 being a record year, when over 3 million placements. However, with the recession, decline in U.S. manufacturing and the poor fortunes of the Big 3, the Staffing Industry is leveling off.
With the Big 3 being forced to tighten their belts and restructure to survive, so will the Staffing Industry be forced to adapt. Jobs in manufacturing are disappearing, so we need to re-evaluate business strategy and re-focus our niche markets. We also need to look on the positive side. For instance, the U.S. Bureau of Labor Statistics projects that the Staffing industry will become the second-largest job-growth American industry.
There are still opportunities for growth for the Staffing industry. The laid off workers still need to find alternative employment, and the economy is starting to show signs that the recession has bottomed out. Economic recovery should begin towards the end of this year, and with it increased job postings by employers. The American Staffing Association reminds us why the Staffing Industry is resilient:
“Jobs, flexibility, bridge to permanent employment, choice of alternative employment arrangements, and training—these are the benefits staffing firms offer to today’s workers. Flexibility and access to talent—these are the benefits staffing firms bring to business clients. And jobs, labor market flexibility, efficient bridging to permanent jobs, and training—these are the benefits staffing firms bring to the economy…. The industry has been growing faster than the economy because of flexibility: Workers want it, businesses need it, and it’s good for the economy”. http://www.americanstaffing.net/statistics/economic.cfm
There is a light at the end of the tunnel. It only took 50-plus years, but Dr. William Deming’s voice is finally being heard in America. If we can make it through this dark period in America’s auto industry – and we will –there is a brighter future for America. What’s good for the auto industry is good for the Staffing industry.
“A journey of a thousand miles begins with just one step”.
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