Posted on: Monday, May 21, 2001
Hawai'i at Work
Growing profits aren't enough to prevent layoffs these days
Advertiser Staff and News Services
Layoffs long have been used by companies in trouble. But these days, companies with growing profits are cutting jobs in a pre-emptive strike before problems hit.
Experts say this rapid response, before it's clear whether the economic slowdown will become a recession, makes this round of layoffs different from those of downturns in the 1980s and 1990s.
Corning Inc., 3M, Walt Disney Co. and other widely known businesses announced massive job cuts in the past six weeks even as they reported substantial gains in profits. Some are cutting 10 percent or even 20 percent of their work forces, seeking to bolster their bottom lines and stock prices.
"The CEO sees a cloud on the horizon and decides it's a hurricane when it may be just a rain cloud," said Cathy A. Rusinko, a management professor at Philadelphia University.
However, she added, "By cutting jobs, often you drive away your best and brightest employees, while failing to get rid of the deadwood."
The record for corporate layoffs, set in the early 1990s, has been broken in four of the last five months, reaching 165,000 last month or four times the number from April 2000, according to outplacement firm Challenger, Gray & Christmas. And so far this year, big businesses have announced more than 572,000 job cuts, many of them in the automotive, computer, electronics, Internet and telecommunications industries.
In Hawai'i, the employment picture has improved in the past year. The state jobless rate dropped to 4.3 percent in March, compared with 4.5 percent in the same month a year ago.
But a slowdown of the Mainland and Japanese economies, and a decline in tourism could cut into hiring in Hawai'i. The number of Hawai'i employers saying they expect to add workers in the coming months is declining, according to a survey of more than 30 Hawai'i businesses by Manpower Inc.
For workers, particularly those at businesses with increasing profits, disillusionment has mixed with the shock and anger at being let go.
"This is absolutely a disgrace to discard people like trash, especially when you're making money," said Blaine L. Berkowitz, who was laid off after 14 years in the insurance division of Conseco, based in Carmel, Ind.
Conseco plans to fire 1,000 employees and transfer the work of another 2,000 to India by 2003, even though its profits, excluding one-time charges, climbed 76 percent to $54 million in the most recent quarter and its stock hit a 52-week high of $20.24 a share earlier this month.
