Business Brief for December 16, 2005
Friday, December 16, 2005
Layoffs continue but many employers say there is a worker shortage
General Motors and Ford are laying off workers by the thousands and analysts predict a decline in housing production yet according to a CNN Money article labor experts and executives say there is already a shortage of workers. Retiring baby boomers plus a growing economy expected in 2006 may move the labor market in favor of job seekers.
"I would say by the end of next year, it could take 12, 13, maybe 14 weeks to fill a spot, and that's when you'll see upward pressure on wages," said Jeff Joerres, chairman and CEO of Manpower.
Deloitte Consulting and the National Association of Manufacturers have conducted a survey finding that more than 80% of surveyed manufacturers say they are experiencing a shortage of qualified workers. 90% say they have a moderate to severe shrortage of qualified skilled workers. 83% say these shortages are affecting their production.
"They've been getting lean and pushing the efficiency envelope for a decade," Dick Kleinert, a principal with Deloitte who conducted the NAM survey, said "So in this latest survey, when we asked what was the most important factor in their success, being a low cost producer status ranked only No. 3 on the list. What ranked as No. 1 attribute was having a high performance work force."
- Chris Isidore. "A worker shortage but layoffs continue" — , December 15, 2005
- National Association of Manufacturers. "Developing ‘Human Capital’ Must Be Priority" — , November 22, 2005
GM offers $15 billion in tech contracts
Despite being in financial trouble General Motors is holding $15 billion in tech contracts. The five year contracts, planned to be awarded within weeks. The 40 contracts will be the largest group of contracts ever awarded at the same time.
EDS, spun off by GM in 1996, carried out $2 billion in business with GM last year 10% of EDS' revenue. EDS's contract will expire in June.
GM plans to break up it's tech outsourcing budget into smaller pieces and standardize its outsourcing operation so that it can remove a partner without effecting the entire operation. This will shake up the $300 billion tech outsourcing industry.
"This is revolutionary, If it works for both sides, in a couple of years you'll see a lot of other companies doing it." George F. Colony, president of Forrester Research said.
Ralph J. Szygenda, GM's CTO, said he decided that the whole outsourcing industry was broken when GMs Hermes web site, intended to sell cars in Brazil, kept crashing. The site was run by EDS, IBM, and a few others. When Szygenda held a meeting to find out why, "there was a lot of finger-pointing, and nobody would fess up to the problem," he said. "I realized this wasn't going to work. And I saw it wasn't just a GM problem. It was an industry problem."
So now Szygenda intends to implement his plan. Either GM's way, or the highway.
What about the little guys? Szygenda intends to place $2.5 billion to $3 billion aside on innovative technology. "We use hundreds of start-up companies," he says. "We're not closing out innovation."
- Steve Hamm. "For Partners, It's GM's Way Or The Highway" — , December 15, 2005
- Owen Thomas, Business 2.0. "GM's $15 billion bet on tech" — , December 15, 2005
Tobacco company Philip Morris wins big
Altria, parent company of Philip Morris is preparing for a major restructuring following a victory in Illinois with the state Supreme Court throwing out a $10 billion judgement. The 4-2 decision rule that "light" and "low tar" had been authorised by the FTC. The decision paves the way for Altria to spin off Kraft Foods, a long-expected move held up by major tobacco litigation cases.
- Melanie Warner. "Big Victory for Altria in Illinois" — , December 16, 2005 (subscription)
- "Maker of Marlboro Lights dodges $10.1 billion payment to smokers" — , Thu, 15 Dec 2005 19:57:02 EST