Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, November 16, 1995 TAG: 9511160047
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: Associated Press
DATELINE: NEW YORK LENGTH: Medium
AT&T. IBM. 3M. In the past two weeks, companies at the heart of corporate America have announced plans to reduce their work forces by the thousands.
Job cutting is nothing new. But as 1995 draws to a close and companies prepare to open the books on a new year, the pace is picking up.
AT&T Corp. dropped a blockbuster Wednesday with word it is offering severance packages to almost 78,000 managers to trim its work force by a yet-to-be-disclosed number. Minnesota Mining & Manufacturing Co. said Tuesday it is cutting 5,000 positions in a restructuring.
International Business Machines Corp. last week notified 1,200 workers they would be out of jobs and Burlington Northern Santa Fe said it would cut about 1,100 positions.
For those workers, and for employees at companies shrinking with less public ado, this year may not bring a very merry Christmas.
``It's not a matter of companies wanting to play Scrooge and announce these things during the Christmas season,'' said Eric Greenberg, director of management studies at the American Management Association in New York. ``It's that the 1996 budgets are being approved.''
Public corporations, Greenberg said, have to announce job-reduction plans soon after they're approved because that information has the ability to move financial markets. As most companies are finishing their 1996 plans, the announcements are coming fast and furious.
The same thing happens every year, but the frequency and size of 1995's cutbacks are jarring.
From January to October of this year, 343,000 layoffs were announced, according to Challenger, Gray & Christmas Inc., a Chicago-based job placement firm. October's 41,000 rank as the highest since May.
The reductions come as companies struggle to increase profits as the economy slows. Some cutbacks are merger-related. Others are purely to cut costs. For many companies, though, the job reductions are merely steps in an ongoing process.
IBM and AT&T, for example, have been shedding jobs for some time.
Stephen S. Roach, chief economist at Morgan Stanley & Co., the Wall Street investment firm, said that by the end of the year the number of layoffs reported since March 1991, when the economic recovery began, will be 2.5 million.
``That's a carnage without precedent,'' he said.
Overall employment, he said, has increased just 8 percent during this recovery, compared with 14 percent through a similar point in the prior four recoveries - translating into 6.5 million jobs that were never created.
``The forces that are causing this are really what the '90s are all about: competition, globalization, deregulation, rightsizing, outsourcing,'' Roach said.
The trend shows little sign of abating. Beyond the layoffs that have been announced so far are those that lurk.
For instance, Wells Fargo & Co. on Monday raised its hostile bid in the battle for First Interstate Bancorp. Such a merger is expected to result in thousands of layoffs in California, where First Interstate and Wells are based. Other deals are, no doubt, in the works.
Beyond the corporate ramifications of job cuts in terms of dollars saved and efficiencies gained, the layoff surge is having an effect on employees - even those who stay behind.
``It makes for more tension,'' said Audrey Freedman, president of Audrey Freedman & Associates, a New York-based consulting firm.
For example, she said, continuous layoffs can hurt the performance of those who operate in teams because workers look to highlight their individual performance in an uncertain environment.
On the flip side, though, a cost-driven, layoff-intensive environment also takes some of the pressure off being axed.
``Losing a job these days is not the kind of negative thing it was a decade ago,'' Freedman said. ``Then, if you lost your job you asked, `Why? What did I do wrong?' People don't ask that anymore.''
Job cuts announced wednesday
AT&T
Prudential Insurance Co. of America
Sprint Corp.
by CNB