Winn-Dixie layoffs a harsh economic sign

Rough competition and cost cutting may force other companies to make big layoffs this year.

By ROBERT TRIGAUX

© St. Petersburg Times, published April 22, 2000

Winn-Dixie's decision to lay off 11,000 employees just earned it a dubious distinction. The magnitude of the move puts the nation's sixth-largest supermarket chain at the top of the list of corporate layoffs announced so far in 2000.

But that's not all. Some experts say the deep cutbacks also make Winn-Dixie a harbinger of tougher economic times ahead.

"No question, Winn-Dixie's large-scale layoffs are a sign the economy may be moving into rougher waters," said John Challenger of Chicago's Challenger, Gray & Christmas, an outplacement firm that tracks corporate downsizing. "Fierce competition means some companies must push their prices down, down, down where they end up unprofitable."

Winn-Dixie's plan to cut 11,000 workers tops the U.S. Postal Service's 9,000 layoffs announced in March and is nearly twice Coca-Cola's 6,000 layoffs revealed in January. Together, the top 13 corporate layoffs announced since Jan. 1 total 66,250 employees, according to Challenger. The downsizings cut across major industries, including retail, aerospace/defense, food, electronics, banking and health care.

Winn-Dixie's cuts are the largest by a U.S. corporation since September, when Hechinger Co., the Maryland-based hardware chain, said it would lay off 12,300 people. In June, Cincinnati household product giant Procter & Gamble said it would lay off 15,000. Last year's biggest layoff was the closing of discount store chain Caldor Corp., based in Norwalk, Conn., that resulted in the loss of 20,000 jobs.

Winn-Dixie's job cuts and store closings will eliminate 8 percent of 132,000 positions in the chain, which has operations in 14 states and the Bahamas. A warehouse in Tampa, detergent and bag factories in Jacksonville and division offices in Tampa, Atlanta and Louisville, Ky., will be shut down.

Mirroring Challenger's remarks, Winn-Dixie said tougher competition in a low-margin business forced the severe cutbacks. "Today's grocery business is probably the most competitive in our 75-year history," company chairman Dano Davis said in a statement.

Winn-Dixie is struggling to keep up with such stronger grocery rivals as Wal-Mart, Kroger Co., Safeway Inc., Publix Super Markets and Albertson's Inc.

Despite the booming U.S. economy, the volume of corporate layoffs remained high in 1998 and most of 1999, Challenger says. But last fall, downsizing dropped off dramatically.

After big layoffs were announced in September by Hechinger, United Technologies Corp. and Seagate Technology, no other large-scale cutbacks were reported until Dec. 15. That's when Exxon Mobil Corp. said it would lay off 7,000 as a result of a merger.

Why the lull in layoffs since the fall? Challenger says companies such as Winn-Dixie that needed to restructure their work force chose to delay layoffs because the economy was booming and unemployment was so low. Given the nation's labor shortage, the companies were afraid they would be unable to find new, qualified workers if their business outlook improved. But eventually, the need to cut back took precedent. Challenger predicts there are plenty of other companies like Winn-Dixie that may follow suit in the coming months with big layoffs.

Some companies are busy slashing jobs as a result of ongoing mergers. Among them: St. Petersburg's own Florida Progress Corp., which is eliminating about 1,200 positions as it prepares to be bought this year by Carolina Power & Light.

But Winn-Dixie's layoffs are the first five-figure cuts in the economy in seven months.

"It's such a funny economy," Challenger said. "Here we are in the midst of unemployment claims dropping to their lowest levels in many years, and yet the layoffs seem to be mounting. We have not seen this big a layoff in quite a while."

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