[PEN-L:5136] The wonders of competition

[D Shniad <shniad@xxxxxx>]

The Globe and Mail       Saturday, May 6, 1995

Thanks and goodbye

LEANER AND MEANER/ Mobil announced a fat first-
quarter profit last week, but that didn't stop the
oil giant from giving pink slips to 4,700 people
this week.  It's part of a trend that sees
corporate profits surging, but more layoffs than
ever.

By Matt Murray
The Wall Street Journal
New York

   Last week, Mobil Corp. posted soaring first-
quarter earnings.  This week, it announced plans to
eliminate 4,700 jobs.
   Coming so close together, the two announcements
baffled Mobil employees.  Most of them understand
that the profit imperative means that companies
need to minimize costs.  But when it comes to their
own livelihoods, they have other ideas.
   "It just doesn't make a whole lot of sense,"
said a refinery worker in Beaumont, Tex.  "You
could see them cutting back personnel and doing
different things to get out of a bind, but just to
make more profit, I just don't understand."
   During the 1990-91 recessions ,when layoffs
were announced almost every day, workers around the
United States were angry and anxious.  Their
employers talked about a tough new world in which
global competition and technological change
required constant leanness, but most employees
assumed that the layoffs would stop when the good
times returned.
   They were wrong.
   While corporate profits were surging to record
levels last year, the number of job cuts approached
those seen at the height of the recession.
   Profits rose 11 per cent in 1994, after a 13-
per-cent rise in 1993, according to DRI-McGraw
Hill, a Lexington, Mass., economic consultant.
Meanwhile, Corporate America cut 516,069 jobs in
1994, according to outplacement firm Challenger
Gray & Christrnas in Chicago.  That is far more
than in the recession year of 1990, when 316,047
jobs were eliminated, and close to the 1991 total
of 555,292 jobs.
   Among the profitable companies now in the midst
of layoffs: Procter & Gamble Co., American Home
Products Corp., Sara Lee Corp. and Banc One Corp.
   Companies argue that layoffs, in good times as
well as bad, have been essential in an age of cut-
throat competition.
   Procter & Gamble chairman Edwin Artzt put it
succinctly when his company began slashing 13,000
of its 106,000 jobs two years ago: "We slim down to
stay competitive.  The consumer wants better value.
Our competitors are getting leaner and quicker, and
we are simply going to have to ran faster to stay
ahead."
   Mr. Artzt made a point of emphasizing that the
layoffs weren't the result of financial
difficulties.  "The public has come to think of
corporate restructuring as a sign of trouble, but
this is definitely not our situation."
   Indeed, the stock market frequently views
layoffs as a bullish signal.  After Mobil announced
the cuts of 9.3 per cent of its work force just a
week after reporting profit of $636-million (U.S.),
a turnaround from 1994's loss of $145-million --
its stock rose to a 52-week high.
   But for employees, the latest layoffs, coming
amid good times and fat profits, seem mean and
arbitrary. It is the seeming relentlessness of the
job losses that aggravates most.
   "Workers very definitely see this as a long-
term trend that has little relationship to how
their company is performing," said psychiatrist
Reed Moskowitz, founder of a stress disorder centre
at New York University.  "Nobody feels secure."
   At Xerox Corp., a company spokesman said the
contract between workers and employers is
fundamentally different from what it had been.  The
company posted net income of $794-million last
year, bouncing back from 1993's net loss of $126-
million.  Nonetheless, it has eliminated 9,500 of
its 97,000 jobs since the beginning of 1994.
   "l know it can sound very heartless when you're
making these decisions when individuals' careers
are affected, especially when the company's making
money," said the spokesman, Judd Everhart.  "But I
think it is a new reality."
   Not surprisingly, Xerox's employees don't see
the benefits of the new thinking.
   "Three to five years ago, I felt pretty close
to being comfortable, but now I think I'm part of a
big wheel that's just rolling," said Bennie Dillon,
a shop steward at the company's Des Plaines, Ill.,
distribution centre.  "Whatever that wheel wants to
do, it's going to do it."
   AT&T Corp. also believes layoffs have become a
fact of life.  "We have to continue to take
advantage of technological advances and changes in
the marketplace and recognize that foreign
competition has a major impact on what we do," said
Burke Stinson, an AT&T spokesman.
   Although the telecommunications concern last
year reported its best results since the old Bell
system broke up in 1984, it eliminated 9,800 jobs
through layoffs, early retirements and employee
buyouts in 1994.  The company had 309,000 employees
at the start of last year.
   Companies reduce their employee rosters in
order to boost profits, but layoffs -- and the fear
of them -- can also exact a price from employers.
   Loyalty is often the first casualty and, at
least in the short term, productivity suffers as
employees spend more time worrying about who will
be hit next.
   "You feel that you've been betrayed," said
Harold Salles, a shop steward at a Mobil refinery
in Chalmette, La.  "People are nervous, people are
worried, people are not working safely."
   Observing that many of the layoffs will be made
according to seniority, he added: "I feel every
young worker that works for Mobil should be
constantly looking to get away from here."
   Some employees complain that layoffs are unfair
because they hit the wrong people.  At Westinghouse
Electric Corp. in Pittsburgh, Pam Cromer, a former
marketing co-ordinator, said she is an example of
that.
   Throughout the early 1990s, when Westinghouse
was reeling from massive losses, she regularly put
in long hours of overtime, sometimes working 80
hours a week.  "I thought they wanted people like
me, who would give up their lives and do anything
to keep their jobs," the 41-year-old said.  "I felt
like a rat running on one of those little wheels."
   Last year, Ms. Cromer was at her desk at 10:30
one night when part of her face went numb.  A visit
to the dentist revealed that she was so tense that
she was clenching her teeth too hard.
   Still, 1994 was the year Westinghouse started
making money again, and after Ms. Cromer survived a
May reorganization and layoff, she assumed she was
safe: "We were shiny, we were the people that were
going to march forward and make a difference."
   It didn't work out that way.  Ms. Cromer, a 22-
year company veteran, was laid off in October, the
week after a colleague died from a burst aneurysm
at the age of 54.
   At a going-away party for her and four others
who also had been laid off, she said employees
remaining with the company told her: "The winners
get to leave and the losers get to stay."
   For surviving employees, the pressure and the
sense of instability can erode teamwork and trigger
backbiting.
   Some workers become burned-out nihilists,
figuring they mean nothing to their companies.
Others hop onto an ever-accelerating treadmill,
pushing themselves to work 12 or more hours a day,
six or seven days a week, out of the fear that
anything less will make them targets the next time.
And it doesn't help when people who are worried
about losing their jobs have more work dumped on
them because co-workers have been fired.
   In a recent survey by the American Management
Association, nearly half of the respondents said
they felt more overwhelmed at work than they did in
early 1993 -- before the economic recovery gained
full steam.


Daughter has short day at office

-- Associated Press

CINCINNATI -- A man fired on Take Our Daughters to
Work Day -- and escorted out of the office with his
8-year-old daughter said yesterday he would not
return even if the company offered the job back.
   It says it won't.
   "There's no humanity," said Bill Means, who was
a systems engineering manager at Structural
Dynamics Research Corp. for two years until he was
laid off April 27.
   "Our timing was truly regrettable," said Ed
Neenan, the vice president who told Mr. Means he
was being let go.  "I've got three daughters
myself.  As the head of human resources, I feel
very bad."
   The Milford, Ohio-based company, which makes
and sells computer software used in product design,
has laid off about 140 employees -- 12 per cent of
its worldwide work force -- since September because
of financial problems.