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Layoffs Revive Worker Anxiety Companies Slashing Jobs Again To Please Wall Street

Sat., Sept. 20, 1997, midnight

Just when it seemed safe to feel good about your job - maybe even ask for a raise - along comes a new round of big layoffs by companies eager to please Wall Street.

After months of quiet, the five biggest layoff announcements of the year have all come in the last 11 weeks, including big cuts by Woolworth, International Paper, and one this week by Whirlpool.

But experts say the healthy economy will make it easier for many of those laid off to find new work. The nation’s jobless rate was 4.9 percent last month, near a 24-year low.

“It’s not as if these people are going to languish for a year on the unemployment line,” said John Challenger of the job-placement firm Challenger, Gray & Christmas Inc. “But it does create a sense of anxiety. You never know when its going to hit your company.”

That anxiety is one factor keeping workers from demanding higher pay, which in turn is holding down inflation. “Each time it seems wages are going to go up, in comes another wave of downsizing,” Challenger said.

Challenger, who tracks layoff announcements in a monthly report, said the period from April through June was among the quietest this decade for layoff news.

Then, Woolworth and International Paper said in July they would each shed at least 9,000 workers, or roughly 10 percent of their work forces. Stanley Works and Fruit of the Loom followed soon after with cuts of nearly 5,000 each.

On Thursday, Whirlpool said it would trim 4,700 jobs in a restructuring, and hours later Food Lion said it would close 61 supermarkets in Texas, Oklahoma and Louisiana and lay off 3,100.

Even Toro, the snowblower maker, put a chill through its workers Thursday by saying it will close a plant in Minnesota that employs 230.

And it could get worse before it’s better.

“I see this trend continuing,” said Ned Riley, chief investment officer with Bank-Boston. “Some of the major companies, the Cokes, the Intels, they all have mentioned that revenue growth is difficult to achieve.”

Which points to a key reason for the latest cutbacks: appeasing investors eager for improved bottom lines.

That was also true during the early 1990s, when General Motors, Sears and IBM all laid off tens of thousands. But the stock market’s stunning rise since then has drawn even greater demands from the public for profit improvements.

In typical fashion, shares of Whirlpool surged 14 percent Thursday after the company announced the layoffs. Food Lion shares rose 3 percent Friday on its news, which came after markets closed Thursday.

“We’re so shareholder driven, even compared to a decade ago,” Challenger said. “Companies that don’t make their earnings expectations are punished by the stock market. The shareholders do not let companies have very much time to take action.”

Eastman Kodak, its stock off by more than a third since February because of a price war with Japanese rival Fuji, is planning cost-cutting steps that are expected to result in layoffs. Many of the recent cuts, on the other hand, are merger-related. Wells Fargo said last month it would cut an additional 1,200 workers because of its 1996 acquisition of First Interstate Bancorp.



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