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Ramping Up, Ramping Down

In Europe and Japan, higher levels of contingent work initially emerged as a response to rigid labor laws, but are now part of a broader corporate strategy to become more responsive to market changes.

April 12, 2007
BMW, like most European companies, has a long history of using substantial amounts of temporary labor. In Europe and Japan, higher levels of contingent work initially emerged as a response to rigid labor laws, but are now part of a broader corporate strategy to become more responsive to market changes.

    Manpower Inc. may be based in Milwaukee, but 87 percent of its revenue is earned abroad. France, not the U.S., is its largest market. In Japan, the percentage of part-time and contingent employees in the workforce hit a record 33.4 percent in the third quarter of 2006, a full 10 percentage points above the U.S. rate.

    Given the relatively unregulated employment environment in the U.S., employers have been more inclined to adjust the workforce through layoffs. Consequently, they now lag behind their European counterparts in developing a contingent workforce strategy.

    European companies operating in the U.S. bring their staffing strategies with them. When BMW moved into production for five new models in 2006 at its plant in Spartanburg, South Carolina, the German automaker signed a new supplier-of-record contract with MAU Inc. to provide 500 temporary workers to support its core workforce of 4,500.

    MAU, based in Augusta, Georgia, specializes in temporary labor for manufacturers. Almost half of its clients are in the auto industry, where workforce flexibility is essential.

    MAU workers at the BMW plant receive $12 to $13 per hour, plus health and disability insurance, paid holidays and vacations, and a 401(k) plan. MAU supplies an on-site management team that provides orientation, onboarding, safety training and administrative services for the temporary workers before turning them over to BMW.

    "BMW takes responsibility for managing them on the line, but we ensure that the right people are on the job and ready to perform," MAU president Randy Hatcher says.

    The on-site MAU management team also provides ongoing process improvement for BMW.

    "This can be one of the greatest benefits of a staffing arrangement," Hatcher says. "It brings in another set of eyes to look at operations. We combine our best practices with BMW’s best practices to create optimal workforce management."

    Although lower hourly costs still drive decision-making about temporary labor, simple comparisons are not sufficient, according to MAU. The company says it cannot release BMW wage and benefit costs, but notes that calculating savings that way misses the larger question.

    "Companies beat down staffing agencies on the hourly rate, but that’s really not the point," Hatcher says. "Our measurement systems give the client feedback on the return on their investment at the hourly rate—the cost-effectiveness of the labor they use."

    In addition, when MAU takes over staffing, it sets baseline turnover and absenteeism metrics and then warrants to the client that it will improve them. "Some companies have simply accepted high turnover and absenteeism rates among temporary workers, but we promise to constantly measure and reduce both," Hatcher says.

    Companies like BMW use temporary labor to deliver a new line quickly, but they also use temporary labor to take over production on an old line while the core workforce moves over to a new production pro¬cess. In the auto industry, closing out an old line may take 10 years, Hatcher notes.

Workforce Management, February 26, 2007, p. 29 -- Subscribe Now!

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