Sunday December 14, 2008

TSMC to switch employees to 4-day working week from Dec 2008 / Jan 2009

taipeitimes.com :

Taiwan Semiconductor Manufacturing Co (TSMC), the world's top chipmaker on a contract basis, yesterday [3 Dec 2008] asked employees to take unpaid leave to help the company cut costs and combat the industrial slump driven by the deepening economic slowdown. Employees at manufacturing departments have been asked to take five unpaid furloughs a month beginning this month [Dec 2008] on the back of falling factory utilization. Starting next month [Jan 2009], staff in all other departments will be asked to take one unpaid leave a week. TSMC has been forced to take more stringent cost-control measures as it lowered its fourth-quarter outlook in response to shrinking demand. TSMC is considering slashing 20% from its capital spending for next year from US$1.8 billion this year.

- That's a rather wordy way to put it, but 5 unpaid working days per month, or 1 unpaid leave a week effectively equates to a 4-day working week. With 1 out of 5 working days down, that would also mean an instant 20% pay cut. It's good from the company's point of view to save on costs, but it's not so good from the employees' point of view.

I commented to a relative who works there, that if this trend spreads to Chartered Semiconductor or even beyond, this means that they get the day off to do what they want, and they could go looking for some kind of part-time job in the meantime. If there are any to be had in this environment of global economic collapse.

Those with debts to service (home loans, car loans) would be the worst off. They would take the brunt of the impact. If they had been maxing out on their take-home salary, life would be unbearable right about now. Even those who had *not* been maxing out, would find their "margin of safety" drastically reduced or cut to nothing. Now imagine what that would do, on a broader scale, to the consumer-driven economy when (not if) people respond to a shortened working week and lower pay by cutting back on expenses, as they well should. It would be a self-reinforcing feedback loop that drives everything downward. A death spiral. Welcome to the Second Great Depression.

See also :

1. Junk bonds : Chartered Semiconductor debt rating lowered to junk By Fitch
2. Chartered Semiconductor salary cut - all employees pay reduced by 5-10% on economic slowdown
3. Chartered Semiconductor forces block leave, stops bus services, mulls 4-day working week
4. Chipmakers including TSMC, Chartered Semiconductor, SMIC dealt series of blows from global economic slowdown

(2008-12-14 11:14:02 SGT) [Biz] Permalink

Report: GM mulling bankruptcy

This article belongs to the GM, Ford and Chrysler bankruptcy watch story arc.

peakoil.com -> foxbusiness.com :

General Motors has hired a team of lawyers and bankers to determine whether the ailing auto maker should file for bankruptcy protection, according to The Wall Street Journal. GM CEO Rick Wagoner pushed aside the notion of bankruptcy earlier, saying bankruptcy would severely hurt the company's viability because people would lose faith in warranties. Even if GM is able to secure government assistance, the company still might have to file for bankruptcy. Senior GM executives worry that suppliers might tighten up credit to the embattled auto maker, making it difficult for the company to continue business and possibly compromising any potential loan from the federal government. Some analysts say this could be a crucial next step for the auto maker.

- GM should have gone bankrupt a long time ago. There is no way it can continue in its present form such as it is, hindered by high wage costs, expensive healthcare and under-funded pension plans. The ongoing global economic collapse only serves to add fuel to the fire. If nobody's buying the cars, no bailout plan could help. Unless the government takes the bailout money, buys the cars at the end of the production line, promptly recycles them, and feeds them back to the start of the loop. That would be crazy, of course. But would you put it past them?

See also :

1. GM, Ford, Chrysler face bankruptcy risk on crisis : S&P
2. GM risks bankruptcy as it runs out of cash, losing $73 billion since 2004, suspends Chrysler merger
3. GM share price target cut to zero by Deutsche Bank
4. GM collapse could cost $200 billion in bailout, 2.5 million jobs lost
5. GM, Chrysler may go bankrupt after Senate rejects auto bailout plan as talks collapse

(2008-12-14 10:38:10 SGT) [Biz] Permalink

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