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May 2009

Photo of truck courtesy of Toyota.

by Clint Shields

Promising Stability

Avoiding Layoffs in a Downturn

Without waiting for stimulus benefits, some Texas companies make it a point to ensure that their work force continues doing just that: working.

Texas-based Southwest Airlines has never had an involuntary work force reduction in almost 40 years. And Toyota Motor Manufacturing of Texas’ San Antonio plant, which produces the popular Toyota Tundra pickup truck, is taking steps to keep its work force intact while production is slowed.

Few take that task as seriously as Dallas-based Southwest Airlines. The air carrier began flying in 1971 and has survived fuel crunches, economic slowdowns and the months following 9/11 without the need for an involuntary work reduction.

“It’s not that we have a specific policy against it, but we’ve just always put our employees first,” says Brandy King, public relations manager for Southwest. “Our commitment has always been to keep our costs low and stay profitable, which allows us to provide job security and a great place to work for our employees.”

“…for us, involuntary layoffs are an absolute last resort.”

– Brandy King, Southwest Airlines

Southwest founder Herb Kelleher even once sold an aircraft in order to meet payroll in the carrier’s early days. Fuel hedges have also helped the carrier through times of turbulent fuel prices.

The carrier, which had a net income of $645 million in 2007, employs more than 35,000 people throughout its system and operates more than 3,300 flights daily to 64 destinations.

Like other companies, Southwest has periodically offered incentives through voluntary separation packages for employees who were ready to make a change. But Southwest has never mandated a layoff.

More recently, the carrier has tweaked its boarding procedures and offered incentives to customers.

“We’ve kind of gone the opposite way of other carriers in not charging fees for extra things such as pillows or a soft drink,” says King. “We’re constantly looking for options like that in tough economic times, because for us, involuntary layoffs are an absolute last resort.”

Texas Keeps Trucking

Toyota’s San Antonio facility rolled out the first of the company’s popular Tundra truck series in November 2006. The facility directly employs about 2,000 Texans and another 2,200 through on-site suppliers. But the manufacturer is not immune to the slower economy, says Zoé Zeigler, a spokeswoman at Toyota.

“Even during this time, our associates and team members remain our most important asset,” she says.

Toyota has already curtailed marketing and travel cost, eliminated overtime and implemented other cost-saving measures to ensure its employees are affected as little as possible.

In San Antonio, where 200,000 trucks are produced annually, production has slowed.

Texas employment indicators are available online at Texas Ahead.

“High fuel prices in 2008, and then later the economic recession, have hurt sales of all vehicles in the U.S., and the Tundra is no exception,” says Mike De La Garza, manager of external affairs and corporate services for the San Antonio facility. “Currently, we’re producing less than half of maximum capacity. Obviously, our hope is that sales will resume.”

To cope with slowing sales, the plant has combined its two shifts into one and rotates workers into improvement projects and training sessions.

“From our perspective, this investment pays off tenfold.” De La Garza says. FN

Photo of plane and employees courtesy of Southwest Airlines.
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