Timesizing® Associates

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Downsizings Aug. 1-15/2000
[Commentary] ©2000 Phil Hyde, The Timesizing Wire, Box 117, Harvard Square, Cambridge MA 02238 USA (617) 623-8080

8/15/2000  2 downsizings reported, totaling 4,195 lost jobs

1. DaimlerChrysler to lay off 3,745 at truck unit, Bloomberg via NYT, C4.
   DaimlerChrysler's Freightliner unit [will] lay off...19% of the total \number of\ U.S. and Canadian workers...as the truckmaker cuts production because of slower North American truck demand. ...
   [The Reuters version of this story (via RadioTony) specifies 18.6 as the percentage of cuts, that Freightliner will curtail output 18%, and that the "significant slowdown" in new orders is due to trucking firms' struggle with high fuel prices, rising interest rates and driver shortages. So our primitive form of capitalism where your only way of controlling inflation is by raising rates and damaging your own workforce, consumer base and growth rate - is "working." Check out Timesizing's Phase 2 and Phase 3 for an intelligent alternative that controls inflation by mobilizing deflationary incentive (job satisfaction, etc.) throughout the economy and marshalling it against inflationary incentive (money motive) as a counterpoise. This will be everywhere by next century because our current "method" is just too self-destructive. Sorry, Greenspan - you are wielding a really crude 2-edged battleaxe and it's getting time for you to smarten up.]
   The cuts [will] be at plants in Portland OR (770), Cleveland NC (1304), Mt Holly NC (825), Gastonia NC (154) and St Thomas ONT (692). The U.S. cuts will start on Oct. 20 and the Canadian...on Dec. 4.
   [Ah, just in time for Christmas. "How thoughtful."]
   Freightliner expects North American heavy-truck sales to fall as much as 25% this year from 1999.

2. Agilent cutting 450 jobs in health care products unit, AP via NYT, C4.
   Agilent Technologies is cutting...about 9% of the 5,000 [jobs] in its...subsidiary as it seeks to consolidate manufacturing operations.... Based in Palo Alto, Calif., the industrial instrument manufacturer spun off by Hewlett-Packard this year plans to cut about 200 contract employees and streamline manufacturing operations in Andover, Mass., ...China and...Germany. The CEO, Ned Barnholdt, said the moves were necessary to return the unit to profitability....
   [Such moves are never "necessary" when there's a smarter alternative, and that alternative is, cutting hours a little for everyone instead of completely for a few, and a few more, and a few more... - in short, Timesizing, not downsizing.]

• 8/13  Reuters will axe 1,700 in net strategy, by Clayton Hirst, Independent Digital (www.independent.co.uk) via RadioTony, 13 Aug 2000 23:30:53 EDT.
  ...The news and information provider is understood to be planning to make up to 1,700 people redundant as part of a 2-year plan to restructure the group. The move, which will see the £18B company trim its work force by 10%, is part of its transformation into an internet-enabled business. The job losses are expected to be made across all divisions of Reuters to improve margins aggressively. In 1999, for example, its information division operated on a margin of 16%.
  [What's the matter with a profit margin of 16%?!]
  Reuters' CEO Peter Job wants to increase that to 20% by 2002.
  [And damage his own prime market - his own workforce - to do so. And if he achieves 20%, what's to stop him from going for 24% by disemploying another 1700 people? And then 28% from another 1700 jobcuts etc.? And what if every employer takes up this "strategy" - as many of them have and are? Downsizing is not a corporate strategy. It may be diluted and slow-acting, but it's a corporate mass suicide pill.]
  Paul Richards, media analyst at West LB Panmure, said: "They have set themselves a very aggressive target. It is clear that there will be an element of staff cuts as part of this."
  [The staff cuts aren't just "an element as part of this." They're evidently the main thing. This is all Peter Job's got. This is his best shot. Pathetic!]
  However, [Richards] said that it was unlikely that Reuters would "cut swaths of staff in one go". Instead Reuters would handle the loss in a "gentle way", re-deploying staff where it could....
  [And introducing maximum job uncertainty and anxiety all along the way, resulting in a productivity hit and 'walking wounded' syndrome.]

• 8/14  Venture capital - Once the money's pumped in, the restructuring begins, by Beth Healy, Boston Globe, C5.
  ...Exactly 45 days after Boston's Bain Capital pumped $50m into a high-tech spinoff of Carolina Power & Light...Interpath Communications Inc..\..the company has a new strategy, a new CEO, and 80 fewer jobs - the result of a 24% job cut. The company...is an application service provider, or ASP, which runs Web applications and provides data services for large and midsize companies. It is now 65% owned by Bain Capital.... The other 35% stake is held by Interpath's former parent, a Raleigh, NC-based utility, which also invested $50m in late June....

• [V.A. in Va.]
  Value America [based in Virginia] files for bankruptcy and shuts web site, Reuters via NYT, B3.
  The beleaguered online retailer...shut down its Internet retail operations, resulting in layoffs of 185 employees, or about 46% of the total work force [in order to] focus on its electronic services business, which involves developing online operations and infrastructure systems for 3rd-party manufacturers, vendors and distributors, allowing them to conduct their business on the Web.... The company, based in Charlottesville, Va...has been struggling for several months to avoid bankruptcy.
  [The fragmentation of the Great Internet Bubble goes on.... Bankruptcy aka corporate extremis is the only justifiable cause for corporate downsizing in the Timesizing economy of the future. But before it got to this point, a company would have been trimming hours ("Timesizing") along the way, so that as pressure mounted to "avoid bankruptcy," everyone would have gradually less money and more freedom in terms of free time to come up with ideas. Companies often like to "focus" on key business areas when they're in trouble like Value America, but this ignores a vital but just as important dimension of potential focusing - human resources. Under Timesizing, as a struggling company repeatedly trims hours&pay for everyone, the least and most committed employees identify themselves - those least committed to the company by leaving first, and those most committed by their willingness to work their old hours or longer, or take the additional free time and come up with solution ideas, or work the old hours and contribute ideas. The whole time transformation happens gradually, enabling the pressured workforce to respond flexibly and increasingly under its own control at the individual-employee level.
  [The gradual Timesizing approach brings in an additional, creative wildcard to help the company. As the company and its employees respond to more external work pressure with more internal time freedom and optionality, the Timesizing requirement of reinvesting overtime-linked profits on the part of the company, and reinvesting overtime earnings on the part of individual employees - and reinvesting them in human resources in the overtime-pressured skills - tends to gradually and automatically reassign employees within the company to the most creative and inherently motivated (not money-motivated) human functions within the company.
  [Note that four positive transformations are happening under Timesizing -
  1. The whole stressed company is flexibly and gradually centrifuging control its from failing top executives toward its most inherently motivated ("committed") employees. So the top executives are becoming less isolated and lonely (and possibly less defensive and desperate and erratic) within their own company.
  2. Top executives are sacrificing along with their employees, in terms of decrementing their paid hours-per-week right along with their employees - the effect being that they are 'rejoining the human race' a bit as their relatively high (in some cases VERY high) pay comes down, gradually. This tests their commitment as well as everyone else's within the company, and incentivates the less committed among them to leave too - a lesser commitment, that while unidentified may have contributed to the company's declining fortunes and its less graceful "dance with the market."
  3. A number of areas of greater freedom and potential creativity are opening up -
     • more free time,
     • more old employees in new skill areas,
     • and possibly even more new employees from outside with fresh ideas, a totally external viewpoint upon arrival, and necessarily a very high potential interest in and commitment to the company, despite its struggles (or maybe because of them)
     As the company increases individual freedom&control and potential creativity both from within and without, the greater become its chances of a miracle - the greater its chances of invoking the unexpected ("YHWH"????) to come to its aid and rescue.]
  4. As a struggling company's troubles gradually mount, its workweek gradually decreases. This gradually increases the amount of overtime that each employee, including top executives, are bound to reinvest in human capital if they continue to work their old hours - which they won't do unless their dedicated or committed. As committed top executives seek ways to reinvest their incrementally greater overtime earnings, they will tend to draw in "the best and the brightest" of their existing employees, and possibly some new ones from outside - that is, to draw them in to their executive offices and into their greater resources. (Note that this reverses the concentration of wealth and the widening income gap. But more specifically...) This chips away at the wall of privilege - and insulation - that many top executives have built around themselves, a wall that in itself often seriously damages their ability to read and respond to markets.]

1. Dimac to cut jobs at one operation and add at another, Bloomberg via NYT, C3.
   ...[A] company [that] designs marketing programs, including artwork, copy layout and printing..\..which filed for Chapter 11 bankruptcy protection in April, [will] cut about 370 jobs at its direct-marketing operation in St. Louis and move all production to Central Islip on Long Island. The cuts account for 18% of employees at Dimac [Corp.,] based in Bridgeton, Mo.... The company will add 145 jobs at the Central Islip plant, which it said was closer to many of its largest clients. It expects to complete the move by the end of the year. The company will keep 147 people in St. Louis in sales, accounting and other nonproduction jobs.
   [So, 370 cuts and 145 adds gives us 225 U.S. cuts net. And if 370 cuts are 18% of the company, the company has a total of 2,056 employees and 225 net cuts is 11% of the workforce.]

2. Levitz is proceeding with Seaman Furniture merger, Reuters via NYT, C3.
   The furniture retailer...based in Boca Raton, Fla..\..which has 64 stores in 13 states, [will] proceed with plans to merge...and [will] close...four stores in Boston, one in Reading PA, and another in Bakersfield CA.
   [Again, the lethal merger-downsizing link, this one cutting unspecified jobs.]

1. Dow Corning to eliminate jobs in cost-saving move, AP via NYT, C3.
   ...A silicone-based products maker \will\ cut 600-800 jobs worldwide in a move that will save the company...at least $50m. The company [will] offer certain employees an option of accepting an outplacement program or being reassigned within the company. Dow Corning, which has 9500 workers globally, plans to eliminate the jobs by October.... The affected positions have not yet been identified....
   [So let's split the diff and call it 700 jobcuts, which is 7.4% of their company.]

2. Informix to cut work force and take a charge, Bloomberg via NYT, C3.
   ...A database-software maker [will] dismiss about 430 employees and take a 3rd-quarter charge as part of a reorganization. The job cuts account for about 10% of the work force. The charge will total $75-90m and cover the cost of eliminating redundant jobs and operations while merging...into 2 groups..\..five business areas [resulting from the fact that] Informix bought Ardent [Software] in March....
   [Another takeover-downsizing connection.]

1. NBC's online unit to lay off 20% of its employees, by Saul Hansell, NYT, C3.
   NBC Internet [NBCi], the online affiliate of the NBC television network, said yesterday that it would lay off 170 people...of its total work force of 850. About 100 employees were told yesterday they had been laid off, and the remaining positions will be eliminated by the end of the year, either through attrition, additional layoffs, or because certain units may be sold....
   With ad sales slowing and the markets less forgiving, the company decided to tighten its belt, said William J. Lansing, the chief executive.... He said, "In the environment we are in today, the Street wants to see results now and you have to be very disciplined."
   [He's not being "disciplined." He's disciplining others. They're paying for his game of "humor the speculators," not him - paying with their livelihoods. This is the problem with today's CEOs. When they talk about "discipline," they mean discipline for everybody else, not them - and that is not a feedback system. They never share the sacrifice. Heads they win, tails you lose. Cybernetics? Not hardly.]
   NBCi had expected to break even in the middle of 2002, but the layoffs and other cost-cutting will allow it to show profits sooner, Mr. Lansing said, but he declined to say when.
   ["Declines to say when" is supposed to be "discipline"? ]
   "Our intent is not to lose money indefinitely," he said....
   [His intent is just to hype his stock price with high-visibility layoffs. The speculators in a pre-Depression stock bubble love to see employees sacrificed and suffering. It's just like the Roman arena during the decline and fall of the Roman Empire. The lions are hungry. Throw them another Christian.
   [There is an alternative, which humans everywhere will eventually gain the self-respect to adopt. The alternative is "Everyone sacrifices together, starting at the top." This is the way the timesizing Lincoln Electric Co. of Cleveland does it now. Lincoln is prominently featured on our Working Models page.]
   The company was formed last November as a result of the merger of Snap, an Internet portal site that NBC controlled, and Xoom, a publicly traded site that focused on direct marketing. The company also included several other operations that had been started by NBC as well as several acquisitions, including Allbusiness.com, a service aimed at small companies. "This business was formed through the merger of many businesses, and now we have to figure out how those pieces fit together," Mr. Lansing said....
   [So this is yet another example of the lethal merger-downsizing connection.]
   The Internet units of other broadcast companies have also been cutting back. CBS's relatively small in-house Internet unit laid off several dozen people this summer. [See 6/08/2000.] And the Walt Disney Internet Co., which runs the GO.com portal, is scaling back its ambition to focus on entertainment and travel.

2. Treesource Industries Inc., NYT, C3.
   ...Portland, Ore., owner of 8 lumber mills has laid off 89 workers at their Central Point Lumber mill.

3. Datum Inc., NYT, C3.
   ...Irvine, Calif., a telecommunications equipment company, said it would cut jobs and combine operations in Beverly, Mass., and San Jose, Calif., to reduce costs and eliminate duplicate positions and services. The number of job cuts was not immediately disclosed.
   [Well the slightly later Boston Globe story picked up a number -]
   Datum's operations in Beverly scaled back, Bloomberg via Boston Globe, D9.
   Datum Inc...said it will cut about 20 jobs and combine operations in Beverly and San Jose, Calif.... The company will form a test and measurement division with sales, marketing, and administrative functions based in Beverly. Some other administrative and manufacturing operations in San Jose will be moved to Irvine.... The moves will streamline test and measurement operations...president Erik van der Kaay said....

1. Hyannis-based Infinium Software fires 126 workers in bid to cut costs, Bloomberg via Boston Globe, D7.
   ...[A maker of] products [that] manage companies' financial and personnel functions said it fired...19% of its work force to cut costs. Infinium...had 681 workers before the firings, which were to be completed yesterday. It expects to save $9-10m a year as a result, said John Whyte, executive VP and CEO. It's also combining its marketing and development units to reduce costs after losing money in each of the past three quarters....
   [Oh that's a real smart combo - mixing marketers' wild promises with software developers' realism.]
   Infinium said it will take a charge for the job cuts of $1.6-1.8m in the fiscal 4th quarter....

1. [Again, the takeover-downsizing connection -]
   Qwest [Communications International] talks of job cuts in wake of U S West merger, AP via NYT, B3.
   ...The giant telecommunications company..\..said it might cut up to 4,000 jobs by year's end.... The layoffs, representing about 5% of the work force, will occur as executives decide just how many people it will take to run the...company, Joe Nacchio, the Qwest chairman, said Thursday. The goal will be a revenue-to-employee ratio of about $350,000 [to one??] by the end of 2001, he said. Before the merger, U S West's revenue-to-employee ratio was $225,000, while Qwest's was $490,000.
   [Then Joe was stupid to do the takeover. So here's the latest measure of axecutive performance = revenue-to-employee ratio. Expect downsizings to abound. Downsizings are no problem if there's a labor shortage so acute that on-the-job training has popped up all over the economy, but training in this economic "boom" is rare. Resume-drowned employers have raised job qualifications and cut training. Whenever there's a little pinch so they might have to consider, however briefly, raising pay, they cry for more visas to bring cheap pre-trained youngsters over from India. God forbid they should rehire their own 50-somethings, let alone incur the expense of training. No no. Let the profits continue to trickle down and POUR up. 1920s deja vu.]

2. [And again, the takeover-downsizing connection in the selloff-downsizing form -]
   HomeCom Communications selling InsureRate unit, Bloomberg via NYT, B3.
   ...The Internet software maker..\..based in Atlanta, said 35 jobs would be cut because of the sale, allowing the company to reduce costs and increase cash flow.... The company said it expected to complete the transaction this month.

3. Hospital to close psychiatric unit, by Liz Kowalczyk, Boston Globe, C1.
   The Harvard [University]-affiliated Beth Israel Deaconess Medical Center said yesterday that it's losing so much money treating poor mentally ill patients that it will permanently close one of three psychiatric units.... Most of the 20 nurses, doctors and others who work in the unit being closed will be placed in other jobs, Badaracco said..\..
   [Oh there's a solution for you.]
   Beth Israel Deaconess, which lost $130m last year and is in the middle of a crucial turnaround plan, said it costs more than $1,000 a day to treat these seriously ill patients, many of whom are homeless. But the acting chief of psychiatry, Dr. Mary Anne Badaracco, said Medicaid reimburses the hospital less than $500 a day per patient.
   [Thanks to our Congress' "get tough" stance during our economic "boom"? Why don't we just get honest about it like the Nazis - round them up and gas them. Is this Republican compassion?]
   "I'm sick about this, because these patients really need the care," she said. "The beds are always full; that's the story around the city. But all the hospitals are losing money."
   [Never mind the USA has among the lowest taxes in the developed world, cut them more! Cut the estate taxes! Let the money concentrate even more in the top 1%, who already own more than the bottom 95%. Hell, why not just give all our dough to Bill Gates, settle down to starving and get it all over with.]
   Officials at Medicaid, the state insurance program for the poor, said the hospital's decision was "purely business" and should not be blamed on Medicaid rates. A spokesman for the Division of Medical Assistance, Richard McGrail, said rates are adequate and that hospitals are receiving increases this year that average 11%.
   [Clearly we have two widely divergent opinions here.]
   Beth Israel Deaconess is still negotiating its increase. Hospitals have been battling Medicaid over reimbursements all year. The Massachusetts Hospital Assoc. released a report in April saying the state pays just 80% of the cost of caring for patients. Medicaid officials have raised payments some, but suggest hospitals share the blame because their costs are too high.
   [Oh lovely. A frenzy of fingerpointing.]
   When Beth Israel Deaconess shuts down the 17-bed unit...during the next three months, the state will find other beds for the patients, McGrail said. Medicaid contracts with 5 hospitals in Boston for 157 beds. [Its] 2 other psychiatric units [have] 43 beds....

1. Paccar Inc., NYT, C3.
   ...a truckmaker, is indefinitely laying off about 370 assembly workers, or about a third of the total at a plant in Madison, Tenn., and as many as 60 managers, which would be about a fifth of the salaried employees, as heavy-truck sales decline.
   [So we're talking about a layoff of 370+60= 430 people total out of a total workforce of (370x3)+(60x5)= 1110+300= 1410. So we're indefinitely laying off 430/1410= 30%.]

2. Walter Industries Inc., NYT, C3.
   ...Tampa, Fla., which builds and finances houses and makes industrial products, said it would cut 5% of its workforce, or about 375 employees....

3. AEP Industries to close British manufacturing plant, Bloomberg via NYT, C3.
   ...The world's largest maker of plastic stretch packaging film said it would close its plant in North Baddesley, England, resulting in the loss of 32 manufacturing jobs....
   [Note how the NYT gives a column-wide headline and wide-spaced paragraph to the smallest of the three downsizings - which is safely off in England - and buries the other two in small header, narrow-spaced paragraphs below, so as not to upset advertisers who, of course, want everybody to be happyhappyhappy.]

1. Standard Chartered, short of forecasts, will cut staff by 20%, by Alan Cowell, NYT, C4.
   ...A London-based bank with most of its operations in Asia [Hong Kong, Singapore, Malaysia, India...] announced a severe global cutback today that will eliminate 5,000 positions...to help lower costs. Such cuts, which tend to increase a company's stock price, have been made by other big banks worldwide.... Standard Chartered said the cost-cutting, to include a streamlining of its data-processing centers, would itself cost $715m in severance and other expenses. It is projected to produce savings around $105m next year and $255m annually from 2003 onward. The bank said 6,000 jobs would be eliminated and 1,000 others created. Of the special expenses, about $150m will be used to integrate Grindlays Bank, which Standard Chartered bought for $1.3B in April [to make it] the leading international bank in southern Asia....
   [Again the lethal takeover-downsizing connection.]
   In the U.S., the Bank of America...will reduce its work force by 9,000-10,000 and Dresdner Bank of Germany is eliminating 5,000 jobs, or about 10% of its work force. Barclays Bank recently stirred protests from British customers and politicians with plans to close scores of small branches.

2. Infocure Corp., NYT, C4.
   ...Atlanta, a maker of software that helps doctors manage their practices, will cut 400 jobs and close offices to reduce costs after completing six acquisitions this year.
   [Yet again the lethal takeover-downsizing connection.]

3. Cutbacks at Harrah's unit, Reuters via NYT, C8.
   Harrah's Entertainment Inc. will lay off about 100 of the 5,000 workers at its Rio resort in Las Vegas in a bid to cut costs at the casino, which put a drag on the company's 2nd-quarter earnings....
   [Let's see, that's 100/5000= a 2% downsizing.]
   Harrah's is also reducing operating hours at 4 of the 15 Rio restaurants to a five-day schedule from seven days....
   [So, some timesizing, but operation- rather than employee&operation-based, and anyway, not enough to avoid downsizing.]
   One restaurant, Mein, which served Chinese food, has been closed....

1. Henry Schein [Inc.] to take a charge and cut 300 jobs, Bloomberg via NYT, C4.
   ...The largest supplier of dental and medical equipment in the U.S. and Europe..\..which last year warned of slowing growth in its dental-equipment business, said yesterday that it would eliminate 300 jobs in a revamping aimed at increasing profitability. The job cuts represent about 5% of Henry Schein's total work force and will be taken at all levels. The company...expects to complete the realignment by the end of the year. Henry Schein will take a charge of $8.4m, or 20 cents a share, in the 2nd half to cover severance pay, plant closings and outside fees....

2. Peterbilt lays off nearly one-fifth of its managers, AP via NYT, C4.
   Top managers at the Peterbilt Motors Co. began laying off almost one-fifth of their salaried workers this week, less than a week after laying off nearly one-third of the hourly workers.
   [Guess the hourly workers weren't important enough to make the NYT.]
   Up to 60 managers and other professional workers will be affected by the heavy truck plant's cuts, which officials says are a result of a declining market for large trucks.
   [So, 20% of their salaried employees (60 jobcuts) and 33% of their wage workers (no figure given). Note the class distinction in this "classless" society. The bad news is the lost livelihoods. The good news is, a cap on these monster trucks on our highways and streets.]
   The corporate parent of Peterbilt, PACCAR Inc. of Bellevue, Wash., announced last week that 2nd-half production at its plants could be down 20% from its 1st-half levels. Analysts have said rising diesel prices coupled with a glut of used trucks are crippling new truck sales.

For more details, our laypersons' guide to our great economic future Timesizing, Not Downsizing is available at bookstores in Harvard Square, Cambridge, Mass. or from *Amazon.com online.

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