It wasn’t really news this week when Alcoa confirmed it will sell its cast automotive wheels business: local news reports in Wisconsin had already revealed that Alcoa told workers there that their plant will close June 30. Besides, Alcoa has been pulling back from the automotive castings market since 2007.  

No, the news this week was that Alcoa plans to trim its global workforce by 13%, or 13,500 jobs — and, that analysts quickly estimated that would not be enough to restore the shine to the longtime aluminum giant.

The issues defining the global financial meltdown have been characterized as crises of credit (none to be found), inflation (raw materials, energy), deflation (shrinking asset values), and demand (no one’s buying anything), and all of those have been accurate. Each of these is a particular problem for industrial companies, particularly manufacturers.

But, as the crisis lingers, the role of employment becomes more and more central. In Alcoa’s case, the company has a large global workforce, and its obligations to them present an outstanding obligation that hinders its potential for a quick revival of the enterprise’s asset value. So it's being cut.

Of course, the role of employment, and obligations to workers, is central to the domestic automakers’ prospects for global competitiveness. In organizational terms, employees are a cost. Employers want to save costs, but they don’t want to seem to be taking credit for layoffs — even when that might help it regain some financial credibility. Thus, numerous reports of plant closings — especially foundries and diecasters — come to our attention only through the local news reports.

There is a big exception, however, when salaried workers are getting axed. Speaking strictly in humanitarian terms, there ought not to be a difference between the plight of wage earners and salaried people, but it’s obvious that there is. For example, AK Steel announced this week it will start reducing its salaried workforce.

When it’s executives taking the hit, we get even more detail. At ArvinMeritor, we’re told, the chairman earned a base salary of $1.1 million in 2008 — and now the CEO, CFO, EVP, and SVPs will have their salaries slashed by 10%, and other high-ranking employees will have their pay temporarily cut by 5.0%.  These cuts may save some money — but they'll do very little to improve ArvinMeritor's future prospects.

But, it’s likely that more companies will be slashing salaries, because it’s going to become clear very soon that eliminating jobs and cutting resources eventually becomes counterproductive. The remaining workers become overworked, or lose focus on their tasks, or get frustrated by the increase in demands on their time. Customer service suffers. Productivity suffers.

Moreover, a lot of manufacturing companies have already exhausted the potential for economizing this way. Process control systems, data management, and network technologies have pushed productivity to unexpected heights. Over the past 15 years organizations in many industries have adopted Lean manufacturing, to optimize their organizations by minimizing the strain on resources and maximize customer service. In such companies, it may be hard to trim much further. (I’ll forego commenting on the irony that the federal government is gearing up for a massive hiring effort, except to say that little bit of kaizen in D.C. might do some good.)

So don’t smile when executives are cut down to size. You and I are next.