Dana considering layoffs as Obamacare costs mount
by: Maggie Thurber
Dana Holding Corp., recently announced their third quarter results, reporting a 12% decrease in sales and net income of $56 million, compared to with $110 million for the same period in 2011.
The global auto parts manufacturer properly characterized their earnings as solid, and several media outlets covered the details.
Most of the news reports also mentioned the letter President and CEO Roger Wood sent to employees that called for continued vigilance in light of falling commercial vehicle demand in North America and continued economic uncertainty:
The uncertain global economic environment continues to put pressure on production in Europe, China, and Brazil. In North America, as evidenced not only by our earnings release, but by many other companies as well, there is a looming concern in the economy. The threats of a fiscal cliff, along with increasing taxes on small businesses, are holding down job creation and optimism for growth in the United States. These economic factors affect Dana in that we must always be sure that we are keeping our costs in line with our revenue changes.
But that’s where most media coverage stopped. The next paragraph in the letter told the real story:
We must also offset increased costs that are placed on us through new laws and regulations. For example, the Patient Protection and Affordable Care Act, also known as “Obamacare,” is expected to cost Dana approximately $24 million over the next six years in additional U.S. health care expenses. This is a cost that our customers are not willing to cover, mandating that we reduce our overhead expenses to cover them.
Yes, you read that correctly: $24 million over the next six years. And they can’t pass that along to their customers, so they have to reduce their overhead.
That means layoffs, because there’s really no other way for a company to cover that much expense, especially in a recession.
In June, Dana employed 25,500 in 47 countries. By September, they’d shed 1,000 jobs, some of them from planned actions like their divestiture of their Fredericktown, Ohio, facility; the planned closures of their Longview, Texas, and Toledo, Ohio, facilities; and the consolidation of their Rochester Hills, Mich., and Milwaukee, Wisc., plants into other facilities.
But last Friday they laid off seven white collar staff at corporate offices here in the Toledo area. I’ve been told by company insiders that more are being considered.
So while President Barack Obama is campaigning on his auto bailout and the jobs it supposedly saved, his Affordable Care Act – Obamacare – is going to cost jobs … in that same automotive industry.
Dana may be able to survive the increased costs of “affordable” care, but not without consequences for some of their employees.
Other small businesses and their workers won’t be so lucky.