Principled Entrepreneurship Case Study
How Victorinox Avoided Layoffs
Who:
Carl Elsener
Company:
Victorinox
Background:
Carl Elsener, a cutler who, like others in the nonindustrial farmer cantons of central Switzerland, was finding it hard to make a living with his work. When the Swiss military sought a supplier of knives for its soldiers in 1890, Carl designed a simple foldable knife with a few additional functionalities like a can opener, a screwdriver, and an awl. These were all of the essential tools that a soldier would need, he argued. And the soldiers loved it. Thus began the history of the Swiss Army knife and Victorinox.
Problem:
The aftermath of the 9/11 terrorist attack had a devastating impact on the pocket knife industry. Not only had airport shops been one of the best sales channels, the fact that passengers were no longer allowed to carry even the smallest of pocket knives on an airplane destroyed demand for them. Sales caved by one-third.
Solutions:
In response, other companies had huge layoffs. Not Victorinox. The company asked everyone to stop working overtime, to not cash out unused vacation days, and to reduce shifts selected per employee. When that was not enough, the company subcontracted its employees out to other local businesses in different industries. All this remained seamless for the employee. They showed up at work as usual, were bussed to the other company, worked there all day, and then were bussed back to Victorinox. There was no change in salary or benefits. Victorinox absorbed all the mediation hassle and payment differential. “Life has ups and downs,” Elsener commented on the experience. “We are assured that after seven fat years, there come seven lean years. We made sure to be ready for that.”