One manufacturing giant has avoided layoffs for 70 years and still earns billions

Is it possible for a company to avoid layoffs for more than half a century and still be competitive? The answer is yes. 

In a new Fortune feature, my colleague Geoff Colvin tells the story of Lincoln Electric, a $12 billion manufacturing powerhouse that has avoided layoffs for 70 years while still dominating its industry.

“No one is sure when Lincoln Electric had its most recent layoff,” Colvin writes. “CEO Christopher Mapes thinks it was in the 1950s. Vice president Amanda Butler believes it was the late 1940s. Documents suggest it was no later than 1951 and could have been as long as 1925. Whenever it was, no one at Lincoln Electric today was there to witness it, or maybe even alive when it happened.”

You would think that to avoid layoffs for so many years, a company would be sacrificing financial performance. That’s not the case. Founded in 1895, Lincoln went public in 1995. Since then, the S&P 500 is up 740%, while Lincoln Electric stock is up 3,834%, according to Colvin.

“The company, which reported revenue of $3.8 billion last year, is among the world’s largest producers of arc welding equipment and supplies (some competitors are privately held and don’t publish revenues),” he writes. “Financial statements show that Lincoln’s production employees at its primary manufacturing sites in the Cleveland area receive pay above the manufacturing industry average—around $1,075 a week, as the Bureau of Labor Statistics reported. And remarkably, for an old manufacturer, Lincoln Electric isn’t unionized.”

So what’s Lincoln Electric’s secret sauce?

Lincoln avoids layoffs by following a unique, decades-old system, according to Colvin. “That system works within the Lincoln culture, but few, if any, other companies have implemented it successfully—and even Lincoln can’t execute it in every part of its business. Is the system an innovative answer for today’s employers, or is it a tantalizing solution just out of reach?”

You can read more here to find out all about Lincoln’s system and whether it’s possible for your organization to follow its lead.

Regarding layoffs, it’s well known that the tech industry has had significant number of them this year. But the manufacturing industry has experienced mass layoffs as well. Minnesota-based 3M announced in April the company is implementing a structural reorganization plan that includes eliminating 6,000 positions from its global workforce. The staff reductions are expected to save the company an estimated $700-900 million, pretax, according to reports. 

But as experts recently told me, layoffs can lead to a loss of institutional knowledge, lower morale and productivity, and also lead to bigger costs down the road when management decides to grow headcount again.

Lincoln Electric apparently has been thinking about the long term, maybe even into the next century.

Sheryl Estrada
sheryl.estrada@fortune.com

Big deal

EY CEO Outlook Pulse survey released this morning finds CEOs globally are welcoming opportunities created by A.I. However, they also remain wary of unknown, unintended consequences of the technology. Sixty-five percent of CEOs surveyed agree that A.I. is a force for good. Meanwhile, 67% also agree there needs to be much more of a focus on the ethical implications of A.I. and how its use could impact key areas of our lives such as privacy. 

In addition, 66% of CEOs believe the impact of A.I. replacing humans in the workforce will be counterbalanced by new roles and career opportunities that the technology creates.

The survey also covers the areas of capital allocation, investment, sustainability, and transformation strategies. The findings are based on a survey of 1,200 global CEOs.

Going deeper

"Better with Age: The Rising Importance of Older Workers," a global study from Bain & Company estimates that approximately 150 million jobs will shift to workers 55 and older by 2030. The research finds that worker motivations evolve with age, with attributes like interesting work and autonomy rising to the top around age 60. And when it comes to older workers, too few firms recognize their changing needs and priorities or invest in integrating older workers into their talent system.

Leaderboard

Pierre Breber, VP and CFO at Chevron Corporation (NYSE:CVX) will retire from the company in 2024 after 35 years of service. Eimear Bonner, currently VP and chief technology officer (CTO) and president of the Chevron Technical Center, will succeed Breber as CFO, effective March 1. Bonner, 49, joined Chevron in 1998. Over her 24-year career with Chevron, she has held numerous leadership and operating positions. She became general director of Tengizchevroil LLP (TCO) in 2018 where she was responsible for TCO’s operational and financial performance and led an organizational transformation. In her current role as CFO, Bonner guides the deployment of technology and digital solutions across Chevron’s operations.

Jeremy Knop was named CFO at EQT Corporation (NYSE: EQT), effective July 24, in accordance with the company's previously announced succession process. Knop previously served as the company's EVP of corporate development. In his previous role at EQT, Knop was responsible for leading EQT's M&A strategy since joining the company in January 2021. Before EQT, Knop was a principal at The Blackstone Group focused on debt, mezzanine and private equity investing across the energy industry. Knop was previously an investment banker in the global natural resources group at Barclays.

Overheard

"If a good enough X logo is posted tonight, we’ll make go live worldwide tomorrow."

—Twitter owner Elon Musk posted on the social media site on Sunday amid a series of tweets. As of Monday, X has replaced Twitter’s bird logo. Twitter CEO Linda Yaccarino posted on Sunday about the platform's rebrand to X: "Twitter made one massive impression and changed the way we communicate. Now, X will go further, transforming the global town square."