Friday, March 21, 2008

When companies cut jobs

I just read an article (I’d included the link, but when I checked the next day it was cut) about the rate of exchange between the US dollar and the Eruo and it talked about BMW cutting 5,600 jobs to “cut costs”. It only saves BMW money if: 1) 5,600 people were just standing around not doing anything, or 2) the work they had been doing suddenly stopped.

If BMW’s business slowly decreased and left them with 5,600 extra workers, this should have led to one or two people at a time being laid off over a longer time frame and would not have made the news. The other option is that some dramatic change in BMWs business suddenly made over 5 thousand peoples’ jobs disappear.

I leave it to you to decide which cause is more likely a slow change missed by management or a dramatic change.

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