From William J. Fife Jr., chairman of Giddings & Fewis Inc.: “The labor con¬ tent of a product today is probably less than 15%. So, I don’t care how much I cut [direct] labor, it’s not going to get to the bottom line. We have to get at overhead costs.”

Today, U.S. firms have some of the highest overhead burdens of all global companies. Much of the higher overhead cost is associated with the tiered man¬ agement structures prevalent in the United States. The layers of white-collar managers create a tremendous cost disadvantage. The redundant layers of man¬ agement are associated with the traditional notion that employees need to be supervised to maintain productivity and control quality.

[SOURCE: Adapted from Thane Peterson, “Can Corporate America Get Out From Under Its Overhead?” Business Week (May 18, 1992), p. 102.]

a. With appropriate training of blue-collar workers in American industry, how can layers of white-collar managers be eliminated and productivity and qual¬ ity increased?

b. How does the traditionally hostile relationship between white-collar man¬ agers and blue-collar workers place American firms at a disadvantage in the global market relative to countries that have traditionally fostered coopera¬ tion among all employees?

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