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Industry jettisons more jobs
By KYLE PARKS © St. Petersburg Times, published March 24, 2001 Since December, U.S. companies have cut 377,552 jobs. Consider this: That's roughly the population of Miami.
As companies scramble to salvage their profits and stock prices in a worsening economic slowdown, job cuts are being measured in the tens of thousands of workers. Experts say there's no end in sight. "The scary thing is that unemployment tends to lag a slowdown," said John Challenger, chief executive of Challenger, Gray & Christmas, a Chicago outplacement firm. "Companies hold on to their workers longer than they should, thinking things won't get that bad." The Tampa Bay area isn't immune: Since December, companies have announced more than 2,600 job cuts. Why is everyone rushing to hand out pink slips? It's the simplest and quickest way to cut costs, a short-term fix for companies scrambling to post the profits Wall Street expects. "It's designed to placate Wall Street," said Sun Won Sohn, chief economist for Wells Fargo & Co. "Wall Street is extremely short-sighted. They love cost-cutting. Recognizing that, some companies are playing that game." Wall Street has sought good news. This week, the stock market briefly slipped into status as a bear market. Before it posted a rally Friday, the Dow Jones industrial average had lost 13.5 percent over the past 10 trading sessions. If there's any good news, it's that 2001's job-cut victims may have an easier time getting another job than their predecessors did in the early 1990s, corporate America's last bout of serious cost-cutting. Knowing that doesn't make losing your job any more pleasant, though. "There's definitely a shock factor you have to get through," said Patty Willis, who will soon lose her job when SBC Communications closes its Tampa call center. Some economists predict the job cuts may ease after companies get through a rough second quarter. Labor experts say companies now can pinpoint their problems faster because of just-in-time inventory systems and more advanced technology. Saying companies are doing the smart thing, many stock analysts praise the job cuts. For instance, the moves by Motorola of Schaumberg, Ill., are long overdue, they say. "Motorola really looks like it doesn't run as efficiently as some of its competitors, and they're finally taking real steps to addressing that," said Paul Sagawa, a senior research analyst at Sanford C. Bernstein and Co. Still, the worry is that many companies aren't addressing their core problems as they cut jobs. Competing in an ever-faster global marketplace, some will find they need more complicated solutions, such as fixing their production systems or overhauling their marketing strategies. If that's true, it could mean even more cuts in the coming months as prospects dim for a quick end to the slowdown. The number of job cuts in January, 142,208, was the highest since Challenger, Gray & Christmas started tracking the statistics in 1992. In February, there were 101,731 cuts. Beyond the size of the cuts, what's so unusual is their timing. The beginning of the year is traditionally a slower period for work force reductions: Companies usually take a breather after moving in November and December to improve their year-end financial figures. For clues to when the cuts might end, Challenger looks at all types of economic indicators, from the gross national product to unemployment to consumer confidence. "At this point, I'd say we are still at the beginning of this slowdown," said Challenger, who worries that the nation's unemployment rate is creeping up. After staying around 4 percent last year, it's now at 4.2 percent. "But this is still a very strong economy," he said. "That's still a very low unemployment rate. Much of this will become a game of musical chairs, with people moving from one company to another." Renate Hartman, who owns the Tampa office of placement firm Snelling Personnel Services, has been seeing more and more job-cut victims lately. But that's not a bad thing, she said. With companies making major cuts for big-picture reasons, more potential employers realize that many victims weren't singled out because of poor performance. With unemployment relatively low, many companies are still desperate for qualified help. "We finally have quality people again to offer to companies," Hartman said. "For so long, we were robbing Peter to pay Paul. For a long time, everyone we sent out on a temp job that showed promise got hired." SBC Communications held a job fair Wednesday for about 275 of its employees. About 30 employers showed up, including such companies as Verizon, Alltel, Home Depot, Chase and MetLife. Several attendees were offered jobs on the spot, while Home Depot is coming back to SBC's offices Monday to conduct follow-up interviews with 40 people. "The area is so much better prepared to absorb these people now than the last time Tampa Bay went through this, in 1991," said Beth Leytham, vice president of communications for the Greater Tampa Chamber of Commerce. In 1991, Hillsborough County lost 9,191 jobs as the local unemployment rate hovered around 6 percent. Now, the jobless rate is 2.6 percent. To be sure, the people losing their jobs won't have an easy time. The toughest challenge is for older workers and higher-paid workers who have old-economy skills. But lower-paid call-center workers are much in demand, as are technology-savvy employees. On March 5, SBC told employees at its Hidden River Corporate Park call center they would be losing their jobs. The company's growth was much slower than expected, they were told, so the Tampa center's functions are being moved to Dallas. Patty Willis, 47, was among the employees. Last May, as SBC opened the center, she was hired for $11 an hour to answer customer questions via e-mail. Now, she had to look for a job again. No big deal, it turned out. Within days, she had an offer from Hilton's reservations center, though it was for less money. Then, SBC asked some of its employees to stick around until the end of May. Figuring she'll be able to find something later, Willis decided to stay at SBC awhile. "There are jobs out there for people," she said. "You just have to look." - Times researcher Cathy Wos contributed to this report, which includes information from the San Francisco Chronicle and the Associated Press.
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From the Times Business report
From the AP
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On Friday, Motorola added to the avalanche, saying it is cutting 4,000 more positions, bringing its total cuts in three months to 22,000. On Thursday, Procter & Gamble Co. said it will cut 9,600 more jobs, bringing its planned cuts to 24,600.
