In 2002, in response to the major oil crisis of the last four years and to decreasing automotive sales worldwide, the management of the Mazda Cooperation embarked on a vigorous campaign to redesign their product and production methods with the expressed purpose of producing more fuel-efficient cars and implementing a drastic mechanization of their workforce (especially via the installation of robots). This campaign was supported widely and enthusiastically by the international investment community, with no financial subsidies or support coming from any government. At the same time of announcing the company-wide revitalization campaign, Mazda management gave assurances that the jobs of its workers were protected: attrition and early retirement would be the only methods through which employment would be reduced. During this period of major transition with the accompanying decrease in production (the lowest in the company’s 67-year history), Mazda management arranged, at not insignificant expense, for 5,000 of its workers to be deployed to Mazda dealerships, where they worked as salespersons and maintenance workers. There were pay cuts among the upper management of Mazda, the largest being 20 percent for the most senior managers as well as the elimination of bonuses for four years. Middle managers had their salaries frozen, but not cut. There were no reductions of pay or bonuses for factory workers.
In contrast to Mazda’s approach, Chrysler’s response to OPEC oil pricing did not really begin until 2006, when the company was on the verge of bankruptcy. Chrysler turned to the U.S. government to guarantee its future financing, and management discharged 28 percent of its factory workers and 7 percent of its white-collar employees. About two weeks before Chrysler management applied for federal loan guarantees, the top managers announced pay cuts for the upper management of 2 to 5 percent. Now in 2016, Chrysler is no longer an American firm, having been bought by the German firm Daimler.
At Mazda, the management extended to the production workforce an implicit understanding that they, the production workers, hold the largest stake in the enterprise and that it is the obligation of Mazda management to make sure that their stake is protected. By contrast, Chrysler management treated its production workforce as commodities, tossing the ones not needed for management’s plans out onto the street. The Chrysler paradigm is based on the idea that management has a far greater stake in the firm than the production workers, and that the presence of management employees is of greater importance for ensuring the competency of the enterprise. Mazda policy was oriented toward conserving the workforce as a prime productive asset, whereas Chrysler saw the workforce as expendable.
The effects of these contrasting policies are obvious enough. At Mazda, management was virtually assured of full support from the workforce, including cooperation in the introduction and utilization of new technology. In the case of Chrysler, such results could hardly be expected against the long background of management-union confrontationism. In 2016, only thirteen years after announcing their campaign, Mazda has gained 23% of the market share and has tripled its net profits as well as nearly doubling its stock price; whereas in the same number of years, Chrysler has filed for bankruptcy once and appears to be on the brink of doing so again. What remains to be seen is whether or not American car manufacturers can learn from their past mistakes concerning their employees, or if they will continue to alienate their most important resource and the largest stakeholder, the US autoworker. Hopefully, they will take a lesson out of Mazda’s playbook and retool and refocus their efforts to better meet the needs of all employees regardless of their salary or hourly wage.
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