1700 engineers to go, please
January 22, 2014 1:49 PM   Subscribe

What are the legal and economic factors making it possible for companies in North America to engage in mass layoffs and to then invite former employees to apply for jobs at this same company, perhaps on less favourable terms for the former employees? (Bombardier's announcment of laying off 1700 employees is a Canadian example.) My naïve notion is that free trade has something to do with it – is this analysis correct, and if so, would pulling back from globalization help protect employees when labour laws appear to fail? Interested in opinions as well as papers, blogs, essays and books that a lay person could understand.
posted by cotton dress sock to Law & Government (11 answers total) 4 users marked this as a favorite
Part of it is pension and benefit costs. By the time an engineer has hit mid-late 40s, their ongoing overheads are frequently costed higher than any net value they can bring to the company. So even laying them off with a very decent settlement is cheaper than keeping paying them, and if the company still needs the expertise, they can bring 'em back in as contractors, minus the pesky overheads like pension, vacation and benefits.

Welcome to my life (minus the very decent settlement bit).
posted by scruss at 2:58 PM on January 22, 2014 [3 favorites]

One factor is the modern prevalence two-tier contracts. As scruss points out - it incentivizes substituting younger, low-tier, workers for older ones.
posted by wobdev at 3:37 PM on January 22, 2014 [1 favorite]

A good deal has been written about Circuit City's 2007 decision to fire 3,400 employees, and then offer to rehire them back at lower wages. It filed for bankruptcy the following year and closed for good in 2009.
posted by Mr Mister at 4:11 PM on January 22, 2014 [1 favorite]

To my mind, it's made possible by deregulation and liberalizing of labor hiring/firing laws, not free trade or globalization.

These two things (employment law changes, and free trade) were pushed into place generally by the same crowd (business interests) for similar ideological reasons (less constraint on business means more agile and efficient markets) at roughly the same time (80s - 90s?), but to my mind they are different and unrelated things.
posted by anonymisc at 4:25 PM on January 22, 2014 [1 favorite]

Not related to free trade (other than in the very attenuated sense that increased global competition has a bit of a race to the bottom effect that encourages jurisdictions to compete for business by adopting business-friendly laws).

What you're describing is going to be a function of what each company's collective bargaining agreement actually says.
posted by ewiar at 6:24 PM on January 22, 2014 [1 favorite]

Nothing to do with Free Trade. Bombardier lost out on a big UK rail contract, and the C Series jet project is way behind. Bombardier is also a public company, and sometimes one way to arrest a slide in share price due to managerial incompetence is by slashing staff. It's empowering for the C-Suite folks.

Free Trade has been nothing but a boon for Canadian manufacturers and tech companies. A country of 30 million (Canada) can access a market of 300 million (US).

It's not as if US-made aircraft are flooding into Canada. Regional airlines in Canada depend on Bombardier's Q-series (fomerly Dash) turboprops, well as the smaller C-series regional jets.

The only serious competition in Canada comes from Embraer, a Brazilian (not US or Mexican) company. Canada has no Free Trade agreement with Brazil yet, and presumably this means all the anti-globalization barriers like tarriffs are in place.

Bombardier has no counterpart to Boeing 737's yet, mostly because of problems with the C-Series program that are causing the layoffs.

Every major city uses Bombardier rail cars.

I work in technology, and alls I can say is, thank you Mr. Mulroney for Free Trade.

I also feel lucky that my part of the country does not build or provide parts for C02-emitting cars.
posted by KokuRyu at 7:10 PM on January 22, 2014

It's also worth noting that Bombardier used to have a strong "private jet" business (Bombardier produces Learjet). This market has become really tough since the Great Recession. On top of that, there are more competitors (Honda has its own private jet now).
posted by KokuRyu at 7:14 PM on January 22, 2014 [1 favorite]

Response by poster: Free Trade has been nothing but a boon for Canadian manufacturers and tech companies.

What about the people who work/ed for those companies?
posted by cotton dress sock at 7:15 PM on January 22, 2014

I don't agree that Free Trade or globalization are responsible for the woes of Ontario's workers. Feel free to MeMail me if you would like to discuss!
posted by KokuRyu at 7:24 PM on January 22, 2014

In the US if you're not protected by a union contract or some other contract you are generally subject to Employment at Will. Basically you can be fired (or quit) at any time.

Actually, though, there are rules that kick in if you want to fire a lot of people at once. I believe you have to give 30 days notice. You can still do it though.
posted by alms at 7:40 PM on January 22, 2014

Speaking only for U.S. law, in many economically important states, a employer cannot change certain types of existing job policies without giving "consideration" for the change -- continued employment is not considered adequate consideration. For example, if the law of trade secrets has changed in a state such as Pennsylvania in a significant way such that the employer wants every employee to sign an updated confidentiality policy, for technical reasons, the employer may decide to terminate every employee and rehire them. The new employment serves as consideration for the new job terms which will be the same as the old job terms except for updated legal contracts, such as the confidentiality policy. The same approach may be used for a change of business form, such as where a new corporate entity becomes responsible for the labor force under a merger or aquisition.
posted by shinki-itten at 1:11 PM on January 23, 2014

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