Overnight working makes a comeback as some car makers try to raise capacity

South Korean car makers Kia and Hyundai have both decided to stop night shifts in their factories, in response to demands from local trade unions. Yet just the opposite is happening in Europe and North America. What does this tell us?

Firstly, it’s clear that some manufacturers are trying to find ways to boost capacity to meet demand. According to The Economist , in August Jaguar Land Rover (JLR) announced the return of night shifts at its plant near Liverpool, to help it cope with strong demand for its luxurious Evoque model. The big three American carmakers, having shut surplus factories as part of the government bail-out during the financial crisis, are enjoying a sharp rebound in sales, and are increasingly working round the clock.

Working to capacity is a huge challenge in the car industry . Elsewhere in Europe some of the biggest carmakers are in crisis and are struggling to find ways to cut capacity in market segments flooded with vehicles (which then have to be heavily discounted).

Round-the-clock working makes most sense in industries like car making that have lots of expensive machines and relatively few people. These industries are often described as ‘capital intensive’. So much investment has been poured into factories and equipment that the best way to get a good return on that investment is to work them as hard (and long) as possible. That’s what makes unused capacity so expensive and wasteful.

Perhaps we also learn something about the rising emerging economies too. As they grow richer, wages and demands for better working conditions rise too. Will South Koreans soon start complaining that they are getting lazy compared to hard working British employees?!