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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Job-Cutting Pace Accelerates Layoffs Mount As Companies Slash Jobs To Increase Profits

Associated Press

AT&T. IBM. 3M. During the past two weeks, companies at the heart of corporate America have announced plans to reduce their work forces by the thousands.

Job cutting is nothing new. But as 1995 draws to a close and companies prepare to open the books on a new year, the pace is picking up.

AT&T Corp. dropped a blockbuster Wednesday with word it is offering severance packages to almost 78,000 managers to trim its work force by a yet-to-be-disclosed number. Minnesota Mining & Manufacturing Co. said Tuesday it is cutting 5,000 positions in a restructuring.

International Business Machines Corp. last week notified 1,200 workers they would be out of jobs and Burlington Northern Santa Fe said it would cut about 1,100 positions.

For those workers, and for employees at companies shrinking with less public ado, this year may not bring a very merry Christmas.

“It’s not a matter of companies wanting to play scrooge and announce these things during the Christmas season,” said Eric Greenberg, director of management studies at the American Management Association in New York. “It’s that the 1996 budgets are being approved.”

Public corporations, Greenberg says, have to announce job reduction plans soon after they’re approved since that information has the ability to move financial markets. As most companies are now finishing up their 1996 plans, the announcements are coming fast and furious.

The same thing happens every year, but the frequency and size of the cutbacks are jarring.

From January to October of this year, 343,000 layoffs were announced, according to Challenger, Gray & Christmas Inc., a Chicagobased job placement firm. October’s 41,000 rank as the highest since May.

The reductions come as companies struggle to increase profits as the economy slows. Some cutbacks are merger-related. Others are pure cost cutting. For many companies, though, the job reductions are merely steps in an ongoing process.

IBM and AT&T, for example, have been shedding jobs for some time.

Stephen S. Roach, chief economist at Morgan Stanley & Co., the Wall Street investment firm, says that by year-end the number of layoffs reported since March 1991, when the economic recovery began, will be 2.5 million.

“That’s a carnage without precedent,” he said.

Overall employment, he says, has increased just 8 percent during this recovery compared with 14 percent through a similar point in the prior four recoveries - translating into 6.5 million jobs that were never created.

The trend shows little sign of abating. Beyond the layoffs that have been announced so far are those that lurk just around the corner.

For instance, Wells Fargo & Co. on Monday raised its hostile bid in the battle for First Interstate Bancorp. Such a merger is expected to result in thousands of layoffs. Other deals are, no doubt, in the works.