At Least One U. S. Firm Learns that Retaining Employees in Recession Is Good Policy

The German Business Model Works – Even in the United States

Germany is currently the strongest economy in the West.  In large part this is due to the export intensive nature of the German economy, but it is also in part due to the business model that German firms have adopted.  In this model skilled experienced labor is not a cost, it is an asset.

The Dismal Political Economist has commented earlier how German industries reacted differently to the recession than American industry. 

Can U. S. Industry Learn to Learn From Germany

For workers, who conceded flexibility and agreed to wage restraint, the bargain has meant they have kept their jobs, even during the depths of the downturn when most German firms cut working hours instead of firing people.

Now it turns out a window manufacturer in Minnesota has taken the same approach, and has not laid off any of its workers. 

Marvin Windows has neither laid off workers nor reduced health insurance benefits. And, its executives vow, it won’t. . .The company has cut employees’ pay and reduced perks like tuition reimbursement and 401(k) matching.

Employees haven’t received profit-sharing checks in two years, nor have the 16 members of the Marvin family who work for the company.

But, unlike its top competitors, Marvin has refused to fire people.

Now lest anyone think this is pure socialistic benevolence, here is one of the owners, echoing the German experience.

While Marvin’s story might seem quaint, even naïve, Ms. Marvin says the no-layoff policy is as much a business wager as an act of benevolence. She says she is confident that it will ultimately pay off. Already, she says, Marvin is gaining market share from weakened rivals.. . ., Ms. Marvin suggests that corporate America could learn a thing or two from Marvin’s approach and long-term outlook.

“You can’t cut your way to prosperity. You can’t grow if you are cutting your lifeblood — and that’s the skills and experience your work force delivers,”.

So will the rest of America take notice and at least consider changing its ways?  Well no.  See for many companies cutting workers is just one of the few fun things in a recession, they just enjoy it too much to consider giving it up.