Synopsis: Communication For Productivity
Letters written to some 7500 Workers / Managers / Union Leaders, following a period of strike / Go slow / Murders (1979 - 1987), at Mumbai factory of Larsen & Toubro Ltd. This direct / open / honest communication led to a remarkable atmosphere of trust between Workers and Management, which, in turn, increased productivity at 3% per year (ave).
29 Aug 1986
NO ESCAPE IN THE SKY !
If you have problems on earth can you run-away in the sky to escape? Perhaps. But if you have problems in the sky, where can you run for an escape ?
Sometime back, I wrote to you regarding the loss-making public-sector (Govt) companies which are trying to cut costs. But because the Govt. owns these companies ( and the public owns the Govt? ), they can never become bankrupt !
They can go on making losses forever ! - as long as you and I keep paying taxes.
But a "private-sector" company (owned by share-holders) cannot afford to make a loss. It cannot even afford a lower profit ! -whether it is L&T or Eastern Airlines of America.
What is happening to Eastern Airlines ?
- 12% drop in income despite 5% increase in capacity
- Fierce competition from other airlines
- Loss during April/May/June 1986 - Rs. 57 crores
- Forced to cancel 5% of daily flights due to MAINTENANCE BACKLOG.
After reading this, any wonder that "Texas Air" (another airline company) purchased Eastern Airline ?
Although taken over by "Texas Air", Eastern Airline is fighting a bitter battle of survival.
Chief Executive Joseph Leonard has issued following orders :
1. Freeze all expansion-plans
2. cut operating costs by Rs. 130 crores within one year
3. Senior managers to cut expenses
4. Cancel Miami - London flight
5. From Charlotte city, cut 41 flights (out of 53)
6. Sell-off many Boeing 727 airplanes
7. Lay-off (send home temporarily) surplus employees
8. Within 3 months, cut fuel-bill by Rs. 100 crores (already achieved)
9. For 4600 pilots, flight attendants and non-contract workers, cut pay and benefits by 20% (already done).
When International Association of Machinist - IAM (the Labour-Union), refused to agree for a similar 20% cut in the wages of the 12,000 workers, the management had no choice but to sell the company to "Texas Air" !
And this has forced Joseph Leonard to write to all employees,
"We may have to consider, however reluctantly, a period of consolidation or even retrenchment ".
What Joseph is trying to tell his co-workers is that,
- " When a company is fighting for survival, there are no sides such as the Union and the Management (and the supervisors and officers ! ). There is no escape from the sky ! "