You know what’s coming … this is the 8th year that I have been reporting on Lincoln Electric’s employee profit-sharing results, backed by the firm’s now 69 years-long unbroken no-layoff promise. So let’s get to it.
2017 details (2016 in italics) with my comments below.
69 = continuous years without layoffs
84 = uninterrupted years paying an employee profit-sharing bonus (Lincoln has been profitable every year since 1934.)
$ 25,131 = average 2017 bonus / permanent U.S. employee (approx. 2,800) (2016 $24,111 )
$ 73,955 = average 2016 total earnings per employee (wages/salary + bonus) (2016 $72,323 )
$ 97 million (approx.) = pre-tax profits shared among employees (32% of pretax corporate profit) (2016 $ 68 million (approx.) )
Lincoln Electric (Nasdaq: LECO) remains #1 in the global marketplace for welding technology and materials.
The Guaranteed Continuous Employment Policy remains unbroken since at least 1948. (The no-layoff track record may extend as far back as 1925.) No one has been laid off for lack of work at Lincoln Electric in the US through the Great Depression, wars and the Great Recession.
Notes for 2017:
For many years, the bonus results have been released in mid-December. Due to new SEC regulations, Lincoln now waits until its annual meeting in the spring.
The Guaranteed Continuous Employment Program (GE) – filed as corporate policy every year in an SEC submission – has predominantly applied to the Lincoln’s US-based workforce in North-East Ohio, the firm’s HQ. This workforce is currently about 2,800, the vast bulk of its total US employees.
(In its subsidiaries (production and sales) around the world, the company has tried to introduce elements of its incentive system which includes the no-layoff policy and the bonus. Local labor and accounting laws and regulations and customs have, understandably, forced modifications of the system.)
A Key Challenge for the Future:
In recent years, Lincoln Electric has bought a number of smaller US welding and plasma and cutting technology firms. When these new acquisitions were offered the possibility of operating under Lincoln’s incentive system as embraced in its Ohio area headquarters and manufacturing plants, most refused.
In essence, while employees in these smaller firms loved (who wouldn’t?) the idea of an iron-clad no-layoff promise and significant annual bonuses, they seem to have balked at embracing the other essential conditions of the incentive system. These include compulsory overtime and the reality that annual compensation tracks overall firm performance – in other words, annual personal earnings can decline in tough years.
While Lincoln’s track record on keeping promises to its workforce is unblemished, the same cannot be said for American industry as a whole and it’s no surprise that suspicion seems to rule the day in these smaller firms. (And to be frank, across the country as well.)
The challenge for Lincoln Electric is that it is now essentially operating inside the US with 2 separate compensation systems. That is not easy to do for any large publicly-traded corporation.
And I can’t help but worry about the future.
But for now, the principles of the contract within Lincoln Electric remain strongly embedded in the firm’s DNA and should remain an inspiration ….. shared sacrifices by everyone in the firm in tough times will be rewarded fairly through significant profit-sharing and guaranteed steady work over the long term.
Lincoln Electric has done its best to earn the trust of its workforce by keeping its people on the job through thick and thin – while remaining technologically innovative, and thus highly profitable, for more than a century.
This goal continues to be one which many more private sector firms should embrace in fact, not just with vague rhetoric. Public policy makers at all levels should make efforts to support these initiatives.