Timesizing® Associates - HOMEPAGE

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Downsizings, July 1-15, 2001
[Commentary] ©2001 Phil Hyde, The Timesizing Wire, Box 117, Harvard Square, Cambridge MA 02238 USA (617) 623-8080

7/14/2001  1 downsizing in NY Times (NYT) & Boston Globe (BG), totaling 100 jobcuts -

• MedicalLogic/Medscape Inc., NYT, B3.
  ...Hillsboro, Ore., a maker of medical-records software, cut its work force by 22%, or about 100 workers, and hired an adviser to explore options, including the sale of the company.

1. Motorola says it expects loss in 3rd quarter, by Barnaby Feder, NYT, C4.
   Motorola said yesterday that it would lose money in the third quarter and that it planned to cut 4,000 more jobs than [the 22,000 on 4/11] it had previously announced....

2. Dow Jones second-quarter profit fell 51%, Bloomberg via NYT, C3.
   ...Advertising at Dow Jones and other media companies has fallen in step with the slowing economy. Dow Jones [has] eliminated 429 jobs, or 5% of its workforce, this year to trim expenses....

3. Earl Scheib says it will close 41 [26%] of its auto body shops, Bloomberg via NYT, C3.
   ...in the next 3 years as part of an effort to reduct costs [& revenues! - ed.].... The step would eliminate as many as 328 jobs, or 33% of its staff....

4. Fidelity cuts 160 positions from brokers services group, by Beth Healy, BG, C1.
   ...in the latest example of cost cuts in the financial industry driven by the market's doldrums....

5. RSA Security cut work force 8%, Bloomberg via BG, C6.
   ...A maker of computer-security software cut about 112 jobs...as it seeks to lower costs after Q2 profit failed to meet forecasts. The company employed about 1,400 people on June 30.....

6. Research firm cuts staff, Bloomberg via NYT, C4.
   ...Forrester Research [will] cut 111 jobs or 15% of its workforce.... The company has seen demand for its technology consulting services diminish with the economic slowdown....

7. Online grocer abruptly closes - HomeRuns.com stops taking orders, blames failure on cash crunch, by Stephanie Stoughton, BG, C1.
   ...three days after the dramatic failure of online grocer Webvan....
   [Unspecified jobcuts.]

1. HomeLife shutters stores - Furniture retailer among top 10 in US, calls move temporary, by Chris Reidy, BG, C2.
   HomeLife Furniture Corp...has temporarily shut down its nationwide chain of roughly 130 stores due to "financial circumstances." In a statement, the company gave no date for when it might reopen or call back to work the employees it laid off... HomeLife employs about 2,000 workers....

2. Travel company, Carlson Cos., plans to cut 360 jobs, AP via NYT, C4.
   ...or less than 1% of its work force because of the slowdown in business travel and technology.... The company..\..based in Minnetonka, Minn...with 72,000 employees worldwide, said the job cuts would be in the U.S..\.. The cuts, announced on Tuesday, will come in two of the company's five division, Carlson Wagonlit Travel and Carlson Shared Services, which provide technology and business services to other divisions of Carlson....

3. Britain: Cuts at Psion, by Suzanne Kapner, NYT, W1.
   The British computer equipment maker [will] take a charge of...$42m and cut 250 jobs, a fifth of its staff, as it abandons plans to make hand-held computers.
   [Where can they run to find a product that they can make us think we need, now that we've gone from room-size to desktop to suitcase to laptop to notebook to palm-size?]
   Psion, which has lost market share to Palm Inc., the leader in hand-held computers, will focus on software and services for mobile phones....

4. Aetna to close some unprofitable H.M.O.'s, by Milt Freudenheim, NYT, C5.
   ...The nation's largest health insurer [will] close or sell numerous unprofitable HMO's and expand its business with self-insured companies and medium-size employers in an attempt to improve profitability. In a memorandum sent to all employees yesterday, Dr. John W. Rowe, the CEO...said Aetna...based in Hartford..\..planned to reduce the percentage of health maintenance organizations [HMOs] in which Aetna takes the risk for any losses.... "The H.M.O. isn't dead, it's in the bushes," he said....
   [Unspecified job loss.]

1. Market Place - Despite cost-cutting, Compaq is facing declining earnings and sales, by Chris Gaither, NYT, C8.
   ...The world's second-largest personal computer maker...expect[s] to report lower-than-projected earnings and sales for the second quarter and [will] eliminate 1,500 more jobs than previously announced. Despite progress in cutting costs, Compaq [cited] a sharper-than-expected slump in the European business market....
   In April [4/24], the company said it would eliminate 7,000 jobs or 10% of its workforce, through 4,500 layoffs and the attrition of 2,500 employees. But with the slowing economy and fewer high-technology jobs to be had than in the boom times of recent years, Compaq's workers stayed put. As a result, the company yesterday said it would eliminate those 2,500 jobs through severance, as well as an additional 1,500. The job cuts, expected to come both in the U.S. and abroad, bring the total to 8,500, or 13% of Compaq's workers.
   [So 100% of Compaq's workforce would be 8500/13x100= 65,385 before all this mishigas. But we've already doomed 7000 employees, bringing it down to 58,385. So this 1500 cut is going to be 2.6% of that.]
   For the quarter, Compaq [will] take a restructuring charge of $490m [carefully avoiding the ½-billion figure - ed.] to cover the severance packages and to close plants that make the Alpha line of semiconductors for top-of-the-line server systems. Compaq announced last month that it would discontinue the Alpha line and use chips made by Intel.
   [And so goes the Alpha chip. Add that to the long list of superior products that the market failed to make dominant. Let's see, what kind of stuff is on our list so far?
   • Superior CP/M vanished and we got crappy MS-DOS.
   • Superior Apple Windows struggles as crappy MS-Windows strangles the world.
   • Superior Dvorak keyboard languishes as crappy QWERTY keyboards roll on.
   • Branching out, while we're on letters, superior Simplified English Spelling (not to mention the completely different, completely better script of the Shavian Alphabet) languishes while crappy Standard Orthography keeps confusing.
   • The Avro Arrow got deep-sixed while crappy U.S. jets held the skies.
   • Palmolive Classico is only available in Mexico.
   • You still can't get Canadian buttertarts in the U.S. (though you can at least get Canuck pecan tarts at Shaw's supermarkets in the Boston area & replace the pecans with raisins).
   Readers can send in more examples to timesizing@aol.com for an idea credit if we agree (or take your word for it).]

2. American Power Conversion will dismiss 700 workers, Reuters via NYT, C4.
   ...The company, which is based in West Kingston, RI and makes surge suppressors and uninterruptible power supplies \will\ cut about 10% of its workforce as it struggles with reduced demand for its products. [It] plans to stop manufacturing in Denmark and may also stop...in the U.K. With the latest jobcuts, APC has taken steps to reduce its overall headcount by about 15% from 7,350 employees at the end of the year.

3. Shaw Supermarket's to eliminate 335 warehouse jobs, by Chris Reidy, BG, C9.
   ...The [New England] region's second-largest grocery chain [also] plans to...close one of its distribution centers. Located in East Bridgewater MA, the 29-year-old facility cannot be modernized, Shaw's said....
   The union that represents about 7,000 of Shaw's nearly 30,000 workers, the United Food and Commercial Workers Union, denounced the move and said 400 workers could be affected. Noting that Shaw's recently reported operating profits of $171m on sales of roughly $4B, union spokesman Peter Derouen said, "They are more interested in short-term...profits that in long-term growth."
   [Seems like US-UK CEOs just don't understand where their markets come from. They've fallen for the "magic markets" hat trick = markets from nowhere, employment not required. American and British CEOs need a dose of what French CEOs are getting - a government ban on downsizing by companies in profit so screwball CEOs can't create themselves a general downturn by clobbering their own markets.]
   He also noted that the decision to close the warehouse came after Shaw's complained that the union had made insufficient contract concessions. A West Bridgewater MA-based subsidiary of J. Sainsbury PLC of London, Shaw's operates 185 Shaw's and Star Market stores.

4. Saks says it will close its Palm Springs CA store, Bloomberg via NYT, C4.
   ...and has offered the 60 store employees transfers to other branches....
   [In any case, 60 jobs are gone.]

1. Corning and Alcatel announce large cutbacks, by Barringer & Romero, NYT, C11.
   ...Alcatel, whose main North American site is in Plano, Tex., announced yesterday that it would lay off 2,500 of its workers in this country, or one-sixth of its work force in the United States [17%]. Alcatel, which is based in Paris, has already cut 2,000 jobs in the United States this year. The company has also offered buyouts to 9,000 employees in the United States....
   [From another story (6/29/2001, Deere & Co.), we learned the intended job loss from buyouts/early retirements is half the number of offers, so 9000 offers should result in 4500 lost jobs. Plus of the 2,000 jobcuts mentioned here in the U.S. already this year, we've only counted 900 layoffs in the U.S. on 6/02/2001, giving us 2000-900= 1100 still to count. So from the new 2500 cuts, the 4500 hoped-for job losses, and the 1100 previous jobcuts so far this year that we haven't counted, we get a total of 8,100 lost jobs. So let's see, if 2500 layoffs is a sixth of its current workforce in the U.S., its current pre-cut workforce numbers 2500x6= 15,000. Then 2000 before that would make it 17,000. Then 8100 cuts would be 48% of 17,000.]

2. Needy workers wait for a Kansas plant to reopen, by John Fountain, NYT, A8.
   GARDEN CITY, Kan.- ...The giant ConAgra beef processing plant here is still these days.... A fire on Christmas night...closed the plant, and six months later, it is still closed, leaving many of the 2,300 workers with a growing sense of desperation. Several hundred of them have found other jobs. But most have not. Unemployment in Finney County, of which Garden City is the seat, is about 11%, up from 3-4% in the last decade....

3. An ambitious Internet grocer is out of both cash and ideas, by Saul Hansell, NYT, front page.
   Webvan [will] seek bankruptcy protection.... Nearly all of its 2,000 remaining employees were let go....

4. LTV says it has reached agreement with steelworkers, Bloomberg via NYT, C4.
   ...Under the tentative agreement...LTV will lay off 1,300 workers, halt some raises, reduce costs for pension and health benefits and make employees part owners of the company....

5. Corning and Alcatel announce large cutbacks, by Barringer & Romero, NYT, C11.
   ...Corning, based in Corning, NY, is...closing [a NetOptix plant in Natick, Mass. and] two other plants including one completed just a year ago in Benton Township, Pa., and one still under construction in Nashua, NH.... In addition to the $5.1B in Q2 charges, Corning executives said the company would take a $300-400m charge in Q3, most of it related to the layoff of 1,000 workers....

6. Automotive supplier to cut 225 jobs worldwide, AP via NYT, C4.
   The Donnelly Corp. [will] cut...3.8%...to reduce costs and increase shareholder value....
   [This is the most destructive type of CEO decision. A company trying to increase speculator value by laying off markets.]

7. Etc... Nashua NH-based Nashua Corp., Globe staff & wire services, BG, D5.
   ...a maker of specialty paper for tickets and receipts, plans to shut its lamination business, eliminate 80 jobs at its Omaha plant, and contract the work out to adhesive-label maker Avery Dennison Corp. to reduce costs....

8. Financial magazine closes, NYT, C7.
   Jonathan Steinberg, the CEO of the Individual Investor Group [will] shut Individual Investor magazine and lay off 90% of the company's staff, or about 50 employees....

9. Cathay Pacific [based in Hong Kong] fires 49 pilots in a union dispute, by Mark Landler, NYT, W1.

10. Layoffs planned by the Journal, NYT, C6.
    The Wall Street Journal is laying off 16 journalists from its staff of 636, most of them connected to the specialized coverage of small business and entrepreneurship.... Last fall, The Journal closed its four regional editions and laid off 20 people.
    [This must be the incident reported on 11/16/2000 without any numbers, so counting the numbers now without the extra downsizing, we count the total of 16+20= 36 layoffs now.]

• Slowdown spurs cuts at top recruiting firm, BG, H2.
  ...Heidrick & Struggles[H&S], one of the world's largest executive recruiting companies, recently laid off nearly 300 workers, or 13% of its global work force. The company said it was making the cuts "in order to adjust to current economic conditions, while retaining the resources necessary to capitalize on growth opportunities when the economy recovers." H&S officials said there has been a "cooling" of executive searches and leadership consulting because of the economic slowdown....

• Warner stores to shut, Bloomberg via BG, C1.
  AOL Time Warner Inc. will close its Warner Bros. retail stores, eliminating 3,800 jobs, after the biggest media and entertainment company failed to find a buyer for the chain, a spokeswoman said. All of the 120 stores will be closed by year-end, spokeswomen Tricia Primrose said. Most will be shut down by the end of October. AOL Time Warner already has eliminated more than 2,000 jobs this year [1/24 #2] from its businesses, including the America Online Internet service, New Line Cinema, Warner Music Group, and the CNN cable network....

1. UMass Memorial Health Care to cut jobs - Chief of struggling hospital estimates 500 will be laid off, by Liz Kowalczyk, BG, E1.
   ...beginning this month. ...Dr. Arthur R. Russo...said that layoffs are "in the best interest of the long-term survival" of UMass Memorial, which lost $49m on operations last fiscal year and has lost $15m so far this year.... Russo said that executives will lay off employees "in the most thoughtful and humane manner possible...."
   [But this is the lethal takeover-downsizing connection -]
   UMass Memorial, a hospital and physician network [that] admitted 40,877 patients last year...was formed by a 1998 merger of Memorial Health Care and the University of Massachusetts Medical Center...intended to improve the hospitals' financial operations and increase their negotiating clout in an era of managed care, but the new network has struggled ever since.
   In April, Russo hired the Florida-based Hunter Group, a turn-around firm known for advocating layoffs and other controversial cost-cutting measures to rescue failing hospitals.... Russo said the Hunter Group also recommends...improving customer service....
   [Fat chance. Russo should be trimming hours and prorating pay a little for everyone, including himself, instead of trimming jobs completely and fantasizing about better customer service with less numerous, more demoralized staff.]

2. Ireland: More software layoffs, by Brian Lavery, NYT, W1.
   The Irish security software developer Baltimore Technologies announced plans for a "signficant reduction in head count," even after cutting 250 jobs since a revamping effort began in May. The company has already saved $20m, but its savings goal of an annualized $42m now appears inadequate.... Baltimore indicated that revenues for the quarter ended June 30 would reach $22m, below earlier forecasts as customers delayed orders....

1. Marconi announces new plan to cut 4,000 jobs worldwide, AP via NYT, C2.
   The British telecomms equipment maker...said that after the new round of cuts, and the farming-out of part of its business, its staff will have been cut a total of 10,000.... In April, Marconi outlined plans to cut 3,000 jobs. Today, the company said 4,000 people had "left or agreed to leave" since those plans were announced..\..
   [OK, we've counted those 3000 in April [4/11], but now let's cut to the chase and count the remaining 7,000 of the "total of 10,000" jobcuts in view. The fact that the 3000 cut in April was called 5.5% gives us a total workforce at the beginning of the year of 55,000 and after the 3000 cut a total workforce of 52,000, described below as "about 50,000." 7000/52000= 13.5% now.]
   The company, which employs about 50,000 people in 19 countries, said the new job losses were part of a cost-cutting plan, and that 1,000 of the jobs would be cut in management.
   Marconi said..\..sales for the current financial year were likely to fall 15%, while operating profits could be cut in half [because] companies were delaying purchases because of the global economic slowdown.... Sales have slowed in the U.S., where Marconi does about 40% of its business. Weaker economic conditions have weakened demand there, too....

2. Siemens to cut 2,000 jobs worldwide in its Siemens Business Services unit - A German technology concern has cut 10,000 jobs this year, Reuters via NYT, C6.
   ...in response to slowing demand for computer services.... The cuts follow the merger of Siemens Business Services with the group's former Information Technology services unit in a drive to reduce costs and improve profitability....
   [and reduce its own best markets.]
   In a letter to workers, Siemens management said it would cut 1,600 jobs from operations in Germany, or more than 10% of the unit's 15,000 workers in Germany.
   The planned cuts bring total job losses at Siemens to about 10,000 so far this year after 8,100 jobs were cut from the group's communications equipment business earlier in the year.
   [OK, so far this year we've only counted 7500 jobcuts from Siemens - 2000 on 4/11, 3500 on 4/27 and another 2000 on 5/11. So again, let's cut to the chase and count all the remaining 10,000-7500= 2,500 jobcuts here and now.]
   The services unit, which last year generated sales of $4.9B, employs more than 33,500 worldwide, about 7% of Siemens's 460,000-strong work force.
   [Let's assume that this 460k figure is after the 10k cut and their Jan. 1 workforce was 470,000. This last 2500 cut we're counting today would then be 2,500/462,500= a 0.54% cut.]

1. Germany: Bank moves to cut costs, Bloomberg via NYT, W1.
   Deutsche Bank plans to reduce its annual expenses by "significantly more" than the 600m euros ($508m) the company earlier announced as it tries to increase profit as markets fall. The bank, based in Frankfurt, is looking to cut costs across the board, a company spokesman, Walter Schumacher.... Earlier, the bank said it planned to eliminate 2,600 jobs, leading to cost savings of 1.5B euros through 2003. Expenses were up 4.3% in the first quarter after rising 34% last year.

2. IBM to cut 1,500 jobs from Global Services, AP via BG, D3.
   ARMONK, NY - After adding more than 10,000 new employees this year, IBM Corp.'s burgeoning Global Services group is laying off about 1,500 workers.
   The job cuts are being made at various US locations to respond to changing client demand.... Global Services, the consulting and outsourcing arm of the technology giant, is one of IBM's fastest-growing units....
   [This is clearly the same story as we got from Reuters via NYT yesterday, which spoke only of 750 layoffs. Who knows which is right, but at any rate, we're justified in counting only an additional 750 cuts.]

3. Mintz Levin lays off associates, cites downturn, by Michael Rosenwald, BG, D3.
   A prominent Boston law firm said this week that a slowdown in business because of the economic downturn had forced it to lay off about a dozen associates.
   Irwin Heller, managing partner of Mintz Levin Cohn Ferris Glovsky and Popeo, said most of the cuts came within the firm's business and finance division, which has suffered the most in the sour economy.
   A majority of the layoffs...were in Mintz Levin's Boston office, though there were others in New York and New Haven. This is the second round of cuts at the firm, which let go of about the same number of associates in April following performance reviews after the close of the fiscal year on March 31..\..
   Heller said "there's no question this offers a windown into what's going on" in the legal community, which is facing a slowdown in work combined with escalating associate salaries. The starting salary for associates jumped in 1999 from $90,000 to, in some cases, $150,000.
   The starting salary at Mintz Levin is $125,000, before bonuses. "You obviously have less patience for associates as they develop than you can have have if they are earning $90-100,000," Heller said. "It just makes it so you have less time, less patience, with them." Heller was quick to caution that the "true driver of this is the slowing economy, not the salary increases."...
   [Ah, but the speeding economy was the original driver of the salary increases, and of the slowing economy.]
   The Mintz Levin layoffs are the talk of associate lawyer chat boards on the Internet, which are buzzing with rumors of job cuts at other local firms.... Paula Patton, the executive director of the National Association for Law Placement, said "the time is right for layoffs with the economy being what it is. I'm not surprised that firms have excess capacity." She warned that, so far, the trend is not widespread.
   That's not much comfort to many law students, who are just learning of the Mintz Levin layoffs and the rumors of others. "The students are no doubt concerned about what they are hearing," said Mark Weber, career services director at Harvard Law School. "They are worried."

1. I.B.M. will cut 750 US jobs [1%] in its Global Services group to respond to changing client demand, Reuters via NYT, C6.
   IBM declined to give a figure, but roughly 750 positions could be cut if 1% of positions were shed in the U.S., which has roughly half the 150,000 employees in Global Services, IBM's consulting arm. The layoffs were being made by local managers trying to respond to changing client demand....
2. Sapient to lay off 14% of work force (or 390 jobs) in Cambridge MA, additional to their 3/3 layoff, by Stephanie Stoughton, BG, D3.
3. Textron sells some assets of N.H. unit - Most of the 150 employees at the Manchester factory will eventually lose their jobs, AP via BG, D3.
4. Foster & Gallagher Inc., Grand Rapids, Mich., in bankruptcy, will fire substantial part of its work force, NYT, C4. [Unspecified jobs lost.]

• Cry that debts repaid fell due again, by Frances Clines, NYT, A10.
  Charlottesville, Va...- "I honestly thought they were calling me in to tell me I got a raise," said Mary Smith, one of nine workers who were dismissed from their jobs in May by the University of Virginia Medical Center after a hospital rape scandal caused officials to vet files for workers admitting to criminal records.
  "I said, 'Why am I being punished [again]?'" recounted Ms. Smith, a...receptionist who said she had a single felony conviction for writing $200 in bad checks four years ago.... "I enjoyed my job, never hid my record and thought I had fully paid my debt to society," Ms. Smith said....
  Ms. Smith and her colleagues have sparked a bit of a civil rights cause here...as critics accuse the university of making a show of firing...in reaction to...accusations that three psychiatric patients had been raped. In that case, the accused worker [Rudolph Johnson] had a felony record but, more importnat in the view of critics, had been allowed to retain his job for two weeks after a patient first accused him of rape....
  Cindy Marshall, who lost her clerical job, said: "I was fired for something someone else did. What about punishing the guy who let the psych workers stay on the job? I worked so hard to get my life back together." Ms. Marshall, a...single mother of two, said she had one felony conviction for writing $250 in bad checks three years ago....

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