Cost Control Remains a Concern at Employers/Consolidation Through Mergers Continues

For many years, executives have been focusing on cost control as a means to boost profits and financial stability. Employee costs are always a focus, as employers seek to boost the overall productivity of their work forces. Often, companies merge with others in order to seek operating efficiencies or gain access to needed capital. Financing is readily available for large corporate mergers and acquisitions, and the number of mergers has been high. A consolidation of companies via a merger may enable the firms to combine customer bases, administrative staff, sales offices and production facilities, while cutting employees who hold duplicated jobs, in hopes of thereby creating more efficient, more profitable firms. Mergers may be spurred by economic difficulties and falling profits, or they may involve large firms seeking to acquire companies that bring advantages that may boost growth and accelerate profits. For example, online leaders Amazon, Facebook and Google have acquired numerous firms in order to bring in new technologies.

Even in a period of vibrant economic growth, good managers continue to seek ways to control costs, including payroll costs. Because they face tough, global competition, manufacturing firms are frequently involved in such mergers. Good jobs in the U.S. manufacturing sector can be found, despite intense competition from manufacturers in China, Vietnam and other offshore markets. Overall, U.S. factories are running with fewer people per unit of output, thanks to immense investments in factory automation and robotics.

A small, but significant, number of firms are “reshoring” some of their manufacturing, by making products at American plants that were previously manufactured in overseas facilities. Even the American textile industry, which was hit hard by layoffs and bankruptcies during the late 1900s, is enjoying a modest rebound. This is positive, but it has not led to large numbers of job openings. However, supply chain problems during the worst of the Coronavirus has caused many companies to reconsider the former habits of reliance on overseas supply chains and work forces. This is providing a boost to the reshoring movement.

Some of the long-term statistical loss in manufacturing employment has been exaggerated by the fact that many firms now outsource a good deal of their non-manufacturing operations to services companies. For example, many computer departments, company cafeterias, distribution centers and engineering needs are now outsourced to companies that specialize in such work, thus dramatically reducing the number of in-house jobs at manufacturing firms. This is the long-term trend of outsourcing in action.

Also, companies in both manufacturing and service sectors have caught on to management by teams, vastly enhanced supply chain technology (such as the use of the internet for ordering and tracking components), along with networked management, distribution and manufacturing systems, which all add up to the fact that fewer mid-management, white-collar types are needed to communicate with the people doing the day-to-day work. Production workers have been encouraged to communicate among themselves. In many cases, workers are taking on unprecedented responsibilities, setting their own goals and schedules, tracking costs and output, thereby boosting profits. Historically, these were the tasks of middle managers. Today, vast numbers of those management jobs have been eliminated. Businesses without factories are also undergoing re-engineering and leaps in productivity, often through the streamlining of processes through the use of better computers and software.

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Cost Control Remains a Concern at Employers/Consolidation Through Mergers Continues, Business and Industry Trends Analysis

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