http://news.bbc.co.uk/2/hi/business/7936397.stm
Summary
This article is about carmaker Toyota cutting employees' wages and working hours by 10%. The cuts will take effect on April 1st and will last for one year. This plan will affect 4500 workers in Britain. Also, the cutting plan causes 11 factories to reduce production and 3 factories stopped producing cars. Toyota has already suspended a night shift on its production line and will shut production for a total of four weeks in 2009. It has already cut 200 temporary jobs and opened a voluntary redundancy scheme last week but has insisted big layoffs would not be necessary. Toyota has already said it will post the first group-wide annual operating loss - totalling more than £3 billion - in its 70-year history.
Connection
Chapter 16 is basically about payroll to employees. The connection here is that since Toyato is cutting on pay and working time, workers' annual salary would be lower. Also, the cutting of the wages is called deduction which connects to the payroll equation: gross pay - deductions = net pay, which leads to a lower net pay. Although the article is talking about Toyota in Britain, I think there are still commissions or other government pensions for employees. However, due to net loss of the company, there might be less people getting less commissions. On the other hand, the government should provide extra pensions for old ages and unemployment.
Reflection
Recently, we can see many articles related to car companies encounting less sales causing net loss problems. Since the first blog entry until now, all my articles are related to the economic depression nowadays manly due to the stock market crash. However, car companies closing down factories and reduce production is always not a wise way because even they produce less cars, their sales will not increase. Thus, they start to cut employees' wages to reduce expenses. However, this might lead to a strike or other possibilities. Therefore, the companies should still produce the same amount of cars and keep the employees but at the same time reduce their selling prices. Although reducing selling prices will not increase the net income a lot but it is still better than getting a net loss like most companies are facing today.
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2 comments:
I think not only the car companies are doing this, almost every business is doing the same thing. Just like what you said, all of those laid off and reductions are because of the depression. I also think that the excutives of the company should not keep taking the huge amount of bonus, and lower their salaries with the workers. These reactions can save money for the business and somehow help the business to survive. The negative side of doing this could be affecting the performance of the business.
LEon Su
I think Hector is right about this: not only the car companies are doing this, almost every business is doing the same thing. As i know the vehicle
companies are affected by the economic crisis the most.
As i know so far Toyota is not the only one who starting to cut the cost of labors. GM which is another major truck making company in USA is starting to act. From the article "GM workers accept wage freeze" we can see how frustrated vehicle business are.
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