Program a win-win for Vancouver manufacturer
Cadet retains valued workers while cutting costs in tough economy
Monday, May 28, 2012
For more information about the Washington Employment Security Department’s shared-work layoff-avoidance program, call 800-752-2500 or go online to shared-work program.
It's a nasty hallmark of economic decline: companies lay off people, losing talented workers who, in turn, surrender their pay and benefits for a weekly unemployment insurance check that barely pays the bills.
In some cases, however, the damage caused when companies and workers part ways in tough economic times is avoidable.
Thousands of companies and workers in Washington state are finding that out as they turn to a long-running government program that enables employers to hang onto their workers while reducing payroll costs to ride out the economic storm.
Run by the state Employment Security Department, the shared-work layoff-avoidance program lets employers reduce the hours of full-time workers while those workers collect partial unemployment benefits to partially offset lost wages.
Thanks to the program, businesses save money and are able to keep valuable employees. Those workers, in turn, keep their jobs and benefits while receiving more income than if they were fully laid off.
"It works equally well for the business and for the worker," said Bill Tarrow, deputy communications director for the state Employment Security Department.
Statewide, the program saved at least 26,000 jobs in 2011, according to the Employment Security Department. Currently, 2,100 Washington companies and 23,000 employees are participating in the program. Before the economic crash, rarely more than 500 companies were involved in the program at any given time. The current number of participants includes 77 companies and 673 employees in Clark County.
One of them is Vancouver-based Cadet Manufacturing, which makes a variety of fan, baseboard and floor heaters, and thermostats. The privately held, family-owned company, which employs 98 people and has revenues of roughly $25 million to $30 million annually, sought out the program in 2009 as the economy tumbled.
Since then, the company has had no layoffs. An average of 10 Cadet employees per month have used the shared-work program. And the business has saved roughly $10,000 per month.
Ros Sin, 32, who's been with Cadet for seven years and who assembles heating fans for the company, said using the program has meant stability for her and her family. Cadet's human resources department handled the paperwork. "We just had to sign our names," Sin said.
A pilot program first
The shared-work program's roots go back to 1983, when Boeing Co. — the aerospace giant and pillar of Washingon state's economy — laid off thousands of workers.
The situation prompted state lawmakers to search for ways to keep workers attached to local companies in a downturn, according to Tarrow. The idea was to prevent laid-off workers from moving elsewhere for jobs, draining the state of talent.
Eventually, Washington state, among a handful of states, took part in a federal pilot program aimed at keeping employers and their workforces intact. Washington state later made the shared-work program a permanent part of its unemployment-insurance system, which is funded by businesses through employee payroll taxes.
In a recent survey by the state Employment Security Department, more than two-thirds of employers who participated in the shared-work program last year said it helped them survive the recession. Another 20 percent of businesses said that it probably helped.
And nearly all of the employers who participated in the survey said they would not only apply to use the program again but recommend it to other struggling businesses.
Any company may take part in the program as long as it's been registered in Washington state for at least six months before it submits an application.
Employers typically use the program for up to a year. But they may apply to use it for longer than that.
The program is for full-time, hourly employees who are eligible for jobless insurance benefits. Employers are allowed to reduce participating employees' work hours by at least 10 percent but not more than 50 percent.
'Grateful' for program
When Cadet Manufacturing faced a tough economy three years ago, it had to find ways to cut costs. Although it maintained its profitability, its sales were down. But the company didn't want to lose employees who, on average, had worked for the company for 10 years. Some of them had put in 20 years with Cadet.
Tami Harmon, human resources manager for the company, knew of the shared-work program from her experience with a previous employer in Oregon.
With management's blessing, Harmon got Cadet involved in Washington state's version.
The company has received approval to use the program for three years now, Harmon said, and "we're hoping for a fourth year."
As the economy continues to recover, she added, ideally the company won't need the program beyond a fourth year.
Suffice it to say, it's been critical for Cadet.
"We retain the talent," Harmon said. "I don't have to go out and search for new assemblers and try to teach them our way."
Hutch Johnson, the company's president, said the program has enabled Cadet to hold onto its trained workforce, which is a "huge advantage" when it comes to sustaining a competitive edge.
Sin, the Cadet worker who puts together fan heaters, said she just feels more secure.
Even when her hours are shaved, she said, she still holds onto most of her income. She has all of her benefits, too. "I'm just really grateful for the program," she said.