Cleveland-based Lincoln Electric has accomplished an impressive feat—it cannot remember the last time the company performed layoffs.
- Lincoln Electric, a large arc welding equipment producer, publicly reported $3.8 billion in revenue in 2022.
- According to company leadership, the last time Lincoln Electric faced layoffs was sometime between 1925 and 1951, but the company’s paperwork is unclear, and executives disagree on the exact date.
- The company avoids layoffs through an aggressive and unconventional system known as “the Program,” in which employees’ hours are increased or decreased based on company demand in exchange for a promise that layoffs are impossible.
- The system is difficult to implement and often requires difficult sacrifices and trust from employees, but other companies regularly reach out to Lincoln Electric to ask how they, too, can implement it, Fortune reports.
- The company’s primary facilities in Ohio hire 3,000 non-unionized workers with an average total income of $93,470 in 2022.
Why It’s Important
Layoffs are a common occurrence in the U.S. economy. The U.S. Bureau of Labor Statistics notes that 1 million Americans are laid off from their jobs every month. Tightening economic factors tend to intensify the issue, with sizable economic crashes like the 2008 financial crisis and the COVID-19 pandemic skyrocketing layoffs amid tough recessions.
As we previously noted, 2023 has already been a difficult year for layoffs, with the tech industry handing down hundreds of thousands of layoffs to employees in the midst of declining productivity and profitability in the aftermath of the pandemic.
The Lincoln “Program” is attractive to outsiders as an alternative to an economy where trained talent is constantly built up and shed based on the dynamics of the market, but the company regularly warns other manufacturing companies that it requires a fundamentally different hiring philosophy to implement. CEO Christopher Mapes tells Fortune that Lincoln’s methods require resilience to power through good and bad times that most companies cannot recreate.
Lincoln’s philosophy comes from the brother of the company’s founder—James F. Lincoln—who once wrote that “If a manager received the same treatment in matters of income, security, advancement, and dignity as the hourly worker, he would soon understand the real problem of management.” He believed “continuous employment” was necessary for “maximum efficiency in industry.”
Lincoln Electric operates on a very transactional trust-based approach to relationships between employees and employers. The system comes with limitations, and workers often face unreliable income during economic downturns and may have their hours reduced to 30 per week. During the pandemic, employees were offered either unpaid voluntary time off or transfers to other facilities. Production returned to full capacity after the lockdowns ended.