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Tickers in this Article: SPR, NUE, FDX, RIO, RTP, BHP, CAT, MSFT, IBM
Human resource professionals would agree that retaining employees is a critical factor in sustaining worker morale, thereby enabling the longevity and success of a business. Layoff announcements from Caterpillar (NYSE:CAT), IBM (NYSE:IBM) and Microsoft (Nasdaq:MSFT) over the past few months could lower feelings of job security, negatively affect product output and ultimately depress end-user consumption. Let's look at a couple of firms at which a combination of employee dedication and management forward thinking have led to employee retention initiatives instead of massive layoff announcements.

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Spirit Aero's Blue Collar Teamwork
Aero-structure maker Spirit AeroSystems (NYSE:SPR) is one bright example of management and employees collaborating to avoid layoffs. Particular attention is due to Spirit Aero blue collar workers, who have come together in deciding to take salary cuts and adjust to modified work schedules to keep new employees working. The apparent pride in the high quality products produced by Spirit Aero and the selfless concession of its workforce are strong signals of a solid team focused on the company's future success. Spirit Aero stock is up about 13% since the beginning of the year through the February 24 close, while the S&P 500 has fallen 14.4% over the same time frame.

Nucor Steel Reduces Output
Nucor
(NYSE:NUE), one of the world's largest scrap steel recyclers, has 18 plants in the U.S. Nucor's novel approach of recycling steel versus using expensive iron ore - for which prices are driven by large mining concerns including BHP Billiton (NYSE:BHP), Rio Tinto (NYSE:RTP) and Vale (NYSE:RIO) - makes it an innovator. Nucor's business acumen does not stop with its steel manufacturing prowess. The company also has the ability to slow down or increase the amount of steel it produces. Slackening demand for steel from automakers and homebuilders could have easily translated into job cuts, but Nucor has instead reduced its output, which in turn has lowered steelmakers' pay. The efforts to avoid layoffs could translate into positive feelings among workers and attract future employees when the worldwide economic slowdown subsides. Nucor stock has fallen about 18% since the beginning of the year through February 24. (Investing abroad poses risks but can also help you diversify. Discover ways to invest in foreign stocks in Investing Beyond Your Borders.)

Other Examples
Other measures that companies are taking to reduce costs include hiring freezes, eliminating contributions to employee 401(k) retirement accounts and, in some cases, reducing marketing expenses. For example, FedEx (NYSE:FDX) decided to do without the $3 million expense required to advertise during the 2009 Super Bowl.

Final Thoughts
The upside-down status of the U.S. economy makes it easy to perpetuate the gloom-and-doom forecasts that we're growing accustomed to hearing. The refreshing news concerning worker retention can be found with some digging, and it could lead to positive long-term growth prospects for companies with employees willing to sacrifice in the short term.

Take a look at how the market signals impending economic cycles and sector performance during each stage; read Sector Rotation: The Essentials.

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