Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, March 11, 1994 TAG: 9403110084
SECTION: BUSINESS PAGE: A-7 EDITION: METRO
SOURCE:
DATELINE: NEW YORK LENGTH: Medium
The corporate austerity is a sobering reminder that many U.S. companies still are streamlining even as business improves.
"It's not possible to suggest that the movement toward reduction of the work force, especially by the larger corporations, is over yet," said James E. Challenger, executive vice president at Challenger, Gray & Christmas Inc., a job-placement firm in Chicago.
For people getting the pink slips, the cutbacks are even more painful in light of clear evidence of economic growth.
Unemployment fell to 6.5 percent of the work force in February from 6.7 percent in January. Businesses hired 217,000 workers in February, the best showing in six months. Retail sales, auto and truck sales and factory orders all are rising.
Across the entire economy, staff cutbacks seem to be declining.
Still, many big companies are idling workers. On Wednesday, Raytheon said it will cut 4,400 jobs, just the latest fallout from drastic defense-spending cuts. Fleet Financial Group, the biggest bank in New England, said Thursday it plans to cut 5,500 jobs.
Even companies in the service industry, which has not been hit nearly as hard as manufacturing, are laying off employees. Burger King said it intends to eliminate about 600 of its 1,300 corporate staff positions.
Consolidation in the communications industry also has prompted deep cuts. In the first two months of the year, GTE said it would shed 17,000 workers; Nynex 16,800; AT&T 15,000; and Pacific Bell 10,000.
Economists expect the cutbacks to continue, even as the economy picks up steam. Manufacturers still need to trim more fat in their payrolls if they want to stay competitive, said Roger Brinner, chief economist at DRI-McGraw-Hill, a forecasting firm in Lexington, Mass.
One reason is that factory workers have become more productive: They are producing more goods for every hour they work. That means employers need fewer workers.
Another reason is that layoffs have become a demonstration of good faith to investors that companies are serious about surviving in the 1990s. Gone are the days when layoffs were a sign of weakness. Now companies want to signal Wall Street that they are as lean and mean as any competitor.
Competition from overseas, where labor costs are lower, continues to prompt further payroll cuts. This is particularly a problem for big companies, and it has been worsened by the North American Free Trade Agreement, which will spur the movement of some manufacturing jobs to Mexico, Brinner said.
Smaller companies are picking up some of the slack. The Labor Department's Bureau of Labor Statistics says businesses that employ less than 250 workers have steadily increased their hiring over the past decade, while job creation in larger businesses has languished.
Although much of the shrinkage in the manufacturing sector has been permanent, some big manufacturing businesses are beginning to hire again. Ford Motor Co. said this week it would increase manufacturing capacity. Caterpillar Inc., Digital Equipment Corp. and MCI Communications also are adding workers. These companies have pushed overtime hours to their limit and now must recall idled employees.
by CNB