When electricity costs skyrocketed amid a slowdown in orders for the metal casings that Del Mar Industries Inc. molds for computer makers, a little-known state program helped the Gardena company avoid layoffs.
The program, called Work Share, pays partial unemployment benefits when companies reduce workweeks or temporarily shut down to save money.
Launched in 1978 to help businesses avoid shedding workers during occasional or seasonal downturns by promoting reduced schedules, Work Share has never been more popular.
Claims have been on the rise since February, with 5,500 people filing for the first time in June, up from 741 a year earlier.
"Last year, it was really very, very minimal," said Gail Shinn, who manages the Employment Development Department's Work Share program. "Then, all of a sudden, it jumped."
The program has grown so fast that callers to its information line have gotten a recording saying a response could take as long as three days. To keep up, Shinn has added 10 people to her staff since April for a total of 34.
"We are a small office, and it's a statewide program," Shinn said. "The goal is to be able to answer people when they call."
California pioneered Work Share and remains one of only a handful of states that provide partial unemployment benefits, Shinn said.
Many manufacturers are shortening shifts to avoid operating during peak electricity price periods and others are reducing weeks or shutting down for a week or two because business is off, said Glenn Lindsay, manager of unemployment insurance services for the Employers Group, a statewide association of 5,000 companies.
Employers need to cut costs, but they are worried about losing experienced workers. Many have heard something about Work Share and want to know if it could help, he said.
"Employers are getting very antsy and restless, and they are hoping this will save the day," Lindsay said.
Word about the program is spreading quickly via e-mail loops shared by human resource managers struggling to cut costs without losing workers.
Even as the economy idles in neutral, retention remains job one for many manufacturers such as Del Mar, which relies on machines and techniques that take years to master and which competes for a limited pool of skilled laborers. Instead of laying off any of its 150 experienced machine and die-cast operators, the plant has scaled back its production workweek from four 10-hour days to three and shut down operations during the first week of July.
To ease the blow on workers' wallets and reassure them of their value, Del Mar got permission from Work Share officials to dip into its unemployment insurance account this month to supplement its workers' reduced wages.
Under the program, a full-time, minimum-wage worker who loses a day a week, for instance, would lose $50 in pay but receive an unemployment insurance check for $22.
"They are not going to be getting a big chunk of money," said Armando Rangel, Del Mar's human resources manager. "But still, it's some money coming in."
Del Mar hopes it's enough to keep them through the slow times.
"We don't want to have to keep churning them over," Rangel said. "The learning curve is so long on these machines. These are big machines where there is a lot of room for error, and it can cause some nasty accidents."
Program Seen as Good Temporary Solution
The program is funded through unemployment taxes paid by employers, who must apply annually to participate.
Employers fill out schedule forms for each worker for each week a Work Share check is desired and then mail the forms to the Work Share office.
The state draws the checks against what the company has paid in unemployment taxes. The amount a worker can draw is capped, like unemployment insurance benefits, and varies depending on wages. If the employer stays on the program too long, there is a chance the draw on its unemployment insurance funds could trigger a rate increase, said Lindsay of the Employers Group.
Employers "want to know, 'Should I lay off five, or put 25 on Work Share?' " Lindsay said. " 'What's the cheapest cost for my unemployment insurance?' "
"If you think it's going to be temporary, it's a good way to retain employees."
Sometimes an employer will reduce hours and obtain Work Share supplements for workers only to have the downturn drag on longer than expected, Lindsay said. "At some point, you are going to have to bite the bullet and let them go."
Some employers complain that filling out the forms is tedious and time consuming. Information about the program is available online at http://www.edd.ca.gov, but the forms can't be submitted via the Internet.
Another drawback, said Delia Herrera, office manager for Magnesium Alloy Products Co., "is if you've been on it for a while, and you lay off somebody, they may not have much left" in unemployment benefits.
The Compton company makes aluminum castings for aircraft gearboxes and door frames. Last year, orders were down and the company reduced its work force from 48 to 25 through layoffs and attrition, Herrera said.
But to avoid more layoffs, the company is cutting back hours and using Work Share as business ebbs and flows.
"We cut down on staff as much as we could without putting us in a bind in case business should pick up," Herrera said. "In our field, we have people who are hard to come by anymore. This enables us to keep from laying them off. It helps a little. It's not a lot of money, but it helps fill in some of the gaps."
Some employees have been at the company for 25 years, she said. "Because they have been here for so long, they know exactly what to do. Some of the jobs have a lot of detail or some finesse in the way they pour the metal. It's just something you've done for so long, and you get better and better at it."
Orders for flame-resistant garments are keeping the 450 workers at Workrite Uniform Co. in Oxnard very busy, but human resources director Lucien Jervis has an active Work Share application on file just in case.
Over the last six years, the company has reduced hours from time to time as orders slowed, often in the summer when purchasing managers for fire departments and electric companies haven't begun to think about stocking up on fire-resistant winter coats and jackets.
Workrite stitches its uniforms out of Nomex, a DuPont Co. fabric woven with flame-resistant fiber. But it might as well be gold thread, Jervis said. "It's extremely expensive, so having someone make a mistake with it is a costly venture."
So when the company reduces hours, Jervis makes sure to get the Work Share checks rolling out as quickly as she can to help keep the experienced sewing machine operators coming back. "It's like holding a slot for them."
Lidia Lopez, a production training center supervisor at Workrite, has had her income supplemented by Work Share checks in the past.
"It was very good because when we have low work they send us to Work Share and it helps a lot," she said. "We take a little time off. But they pay you."
Business has dropped for Onshore Technologies Inc., which makes connections and cables for medical electronic devices, and the Torrance company has reduced its work force to 16, the lowest number in years, said plant manager Richard Beecroft.
In an effort to retain its remaining workers, the company also reduced its workweek from five to four days and uses Work Share to supplement its remaining workers' lost income.
"I have a fairly small crew of fairly highly trained assemblers and mold operators," Beecroft said. "We operate to very strict manufacturing protocols. The work itself isn't necessarily rocket science, but how we go about doing it is very formal. It's extremely documented. So I want to keep my people."
Beecroft said his customers look for low employee turnover, knowing that the manufacturing of such highly specialized products improves with more experienced workers.
It takes at least a year before a newcomer becomes proficient at every aspect of the work, so Beecroft uses Work Share's wage supplement to reduce the anxiety his workers feel about their jobs when business is slow.
"When things get bad, they start jumping ship," he said.
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Work Share Claims are Soaring
A state program that offers partial unemployment insurance pay to workers when hours are cut back has seen a rise in claims during the economic slowdown.
Source: California Employment Development Department