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Publicly Announced Layoffs for June, 1999
June 3, 1999
Lockheed Aeronautical To Cut Jobs
MARIETTA, Ga. - Lockheed Martin Aeronautical Systems, a unit of defense giant Lockheed Martin Corp., will cut up to 2,000 jobs, or 21 percent of the work force, at a plant that produces C-130J cargo planes and F-22 fighter jets for the U.S. armed forces, the company said Thursday.Plant officials said they anticipate about 40 percent of the lost jobs will come through attrition, retirements or transfers and the rest through layoffs over the coming year.
Lockheed Aeronautical said it must reduce expenses to make some products more affordable and to meet a commitment made to the U.S. Air Force to develop the F-22.
``I'm in the process of visiting with all the work force here today in anticipation of a reduction in work force over the next year or as we realign the company and make sure we are competitive,'' Lockheed Martin Aeronautical Systems President Tom Burbage said at a news conference.
The Marietta, Ga.-based operation currently employs about 9,550 people, and staff reductions will hit all levels including management, the company said.
Orders for the C-130J have been slower than expected, with a production slowdown anticipated over the next three to six years. The cost of the F-22 has been intensely criticized by both the U.S. Air Force and Congress, which has been wrestling with the added expense of the Kosovo conflict.
Burbage said the company felt it needed to reorganize to address cost concerns.
June 3, 1999
Adobe to Cut Jobs, Expand Into Net Software
Adobe Systems Inc. said it will cut 250 jobs, or 9% of its work force, and use the savings for its expansion into the fast-growing market for Internet graphics software. The world's biggest maker of graphics software used by newspapers and magazines said it will take a charge of $15 million to pay for the staff reduction, its second in nine months. About 40 % of the cuts will come from Adobe's foreign operations. Separately, Adobe said its fiscal second-quarter profit is expected to be "slightly" above its own earlier estimate of 62 cents to 66 cents a share. Revenue for the quarter ending on Friday is expected to be about $246 million, the top end of the range of analysts' estimates, the San-Jose based company said.June 7, 1999
Dupont Cutting Polyester Jobs
WILMINGTON, Del. - DuPont Co. is slashing about 1,400 positions from its troubled polyester division as a decline in demand for its products has forced the company to look for ways to reduce costs and restructure the business.The company announced Monday that 800 employees and 600 contractors will be laid off. That accounts for about 14 percent of the polyester division's global workforce. About 80 percent of the positions are in North America.
``The deep and prolonged decline in the global polyester market is driving fundamental structural change in the industry, making it imperative that we take additional steps now to strengthen our business,'' said George MacCormack, vice president for DuPont Polyester Enterprise.
June 9, 1999
Procter and Gamble plans 15,000 job cuts worldwide over six years
CINCINNATI, Ohio, - US food and household product giant Procter and Gamble announced plans Wednesday to cut 15,000 jobs worldwide over the next six years as part of a far-reaching strategic restructuring to boost growth and earnings.The cuts, amounting to roughly 13 percent of its worldwide workforce of 110,000 people, aim to boost annual sales to six to eight percent and to accelerate earnings per share to 13 to 15 percent in each of the next five years, the Cincinnati-based company said.
"These job reductions are principally an outgrowth of changes, such as standardizing global manufacturing platforms, to drive innovation and faster speed to market," said chief executive Durk Jager.
The European, Middle East and Africa division will take the biggest hit, with 42 percent of the job reductions, followed by North America with 29 percent, Latin America with 16 percent and Asia with 13 percent.
The cuts are part of a restructuring drive -- announced last September and dubbed Organization 2005 -- aimed at regaining lost market share in the face of growing pressure from competitors worldwide.
P and G -- which makes a variety of consumer products ranging from Mr. Clean to Pampers diapers to Pringles potato chips -- said the program will cost 1.9 billion dollars after tax but will yield annual savings of 900 million dollars by 2004.
A charge of roughly 400 million dollars after tax will be incurred in the current year, another one billion dollars over the next two years and the remaining in the 2002-2004 period, the company said.
The overhaul involves standardizing production lines, aligning manufacturing capacity with new global business units, increase speed to market and streamlining organizational structure to reduce hierarchy and speed up decision-making.
"The cost of Organization 2005 is well justified by both the ongoing operational benefits of our new structure and the substantial financial benefits it will generate for our shareholders," Jager said.
Under the plan, 10 plants and a number of individual production modules are to be closed, resulting in the elimination of 6,700 jobs globally over the next six years.
Another 3,900 jobs are to be cut through the transfer of currently dispersed business activities to regionally based centers to standardize work processes. These Global Business Service centers will be located in Cincinnati; San Jose, Costa Rica; Newcastle, Britain; Brussels; Prague; Kobe, Japan; Manila; and Guangzhou, China.
The streamlining of the organizational structure to cut hierarchy is expected to eliminate 4,400 positions over the next six years.
June 10, 1999
Jobless Claims Jump by 14,000
WASHINGTON - New claims for unemployment benefits rose last week to the highest level since early January, but economists shrugged it off as a temporary blip in a job market that remains exceptionally healthy.The Labor Department reported Thursday that 323,000 Americans filed new claims for jobless benefits for the week ending June 5 -- up 14,000 from the previous week.
The jump pushed jobless claims to the highest level since the week of Jan. 9, when there were 358,000. After reaching that peak, they declined for nearly two months. They remained below 300,000 for nine straight weeks, the longest stretch in 26 years.
The four-week moving average for jobless claims, which smoothes out week-to-week volatility, also was up slightly to 308,250. That was the highest level since May 1.
The increase in last week's new claims was unexpected, but government analysts noted that the reporting period included the Memorial Day holiday. Weeks including a holiday have often been erratic in terms of the number of people showing up in benefit claims offices.
Given that, economists cautioned against reading too much into the latest weekly figure. They also expressed doubts that the one-week increase would influence the Federal Reserve very much as it considers at month's end whether to raise interest rates to slow down the economy and keep inflation under control.
``It's too soon to say that it would ease the Fed's concern, but potentially there are the seeds of some good news there'' if weekly claims continue to grow, reflecting signs of a needed slowdown in the economy, said Astrid Adolfson, an economist with MCM MoneyWatch.
Morgan Stanley Dean Witter economist Kevin Flanagan agreed, adding that the Fed is likely to give more weight to upcoming government reports on consumer prices and producer prices.
Consumer prices spiked up 0.7 percent in April, the biggest gain in nearly nine years, the government said, sparking concerns that inflationary pressures may be rising.
The government also reported last week that the nation's unemployment rate edged down to 4.2 percent in May, returning to a 29-year low.
Still, manufacturing has lost more than 453,000 jobs in the past 14 months due to the global financial crisis, which has cut into exports and increased cheap imports into this country. But the rest of the U.S. economy, powered by strong consumer spending, is continuing to show robust growth.
The Labor Department said that for the week ending May 29, 18 states and territories reported declines in jobless claims while 35 had increases. The state data lags a week behind the national figures.
North Carolina had the biggest declines in benefit applications, a drop of 1,210, which was attributed to fewer layoffs in the electrical equipment industry. Other states with big drops in claims were California, Oregon, Georgia and Tennessee.
Michigan had the largest increase in jobless claims with a jump of 1,938 applications, a rise blamed on auto industry layoffs. Other states with big increases were Texas, blamed on layoffs in the apparel and trade industries, and Mississippi, attributed to layoffs at apparel and electrical equipment factories.
June 12, 1999
Tandycrafts to Close Plant in Van Nuys
Tandycrafts Inc., maker of picture frames and office supplies, plans to close its plant in Van Nuys and fire up to 400 workers, or 18% of its work force, to reduce costs. Tandycrafts said it will replace the manufacturing facility with a new plant in Mexico and will move the plant's distribution and sales operations to its headquarters in Fort Worth. The company said some of the Van Nuys employees will be relocated and others will be fired, beginning in about three months. It expects to close the plant by the end of the year. The move comes five months after the company said it would fire 550 workers and close 121 unprofitable leather and crafts stores to focus on its more profitable office supply and wall decor business. Tandycrafts had 1998 sales of $232.5 million. The frame unit makes frames, mirrors and framed art under the Magee, Impulse and Hermitage brand names.June 17, 1999
Compaq predicts losses, additional job cuts
NEW YORK - Compaq Computer Corp. delivered its second financial jolt in two months Thursday, projecting a quarterly loss as it struggles to recover from computer price wars and management woes.But the world's largest personal computer maker assuaged investors with $2 billion in cost cuts and a reorganization to accelerate sales.
Compaq said it would lose up to 15 cents a share in the second quarter, compared to analysts' estimates of a 20 cents-a-share profit. The company said it would make additional cuts in its workforce beyond the 15,000 reductions made since last summer.
On April 9, the company disclosed its first-quarter profits would be half of what Wall Street expected. That bad news was followed quickly by the ouster of its chief executive Eckhard Pfeiffer and the departure of a half-dozen other top managers.
Compaq continues to be hammered by high costs and intense competition for corporate customers of PCs, with rivals aggressively bidding down prices. But the company has suffered more than others in part because of its management vacuum.
Company executives said they are nearing a replacement for Pfeiffer, but did not name candidates.
Compaq's reorganization will combine its sales staff for big business computers with services, a unit that advises corporations how to set up and manage their computer networks.
"In the two months since the change of management at the company, we have taken a deep look into the strengths and challenges of Compaq," said chairman Benjamin Rosen, who is acting as chief executive.
Compaq said the new job cuts will be set in the next few weeks. The company will take a restructuring charge in the third quarter, but its size also was not disclosed.
June 17, 1999
Jobs May Go As Kellogg Mulls Plant Fate
BATTLE CREEK, Mich. - Leading U.S. cereal maker Kellogg Co., seeking to restore profit growth in the face of weak cereal sales, said Thursday it was considering closing part of a cereal plant in Battle Creek in a move that could affect 700 of the 1,100 employees there.In a statement, the maker of Corn Flakes and Rice Krispies said it would make its final decision on the plant after meeting with the union which represents the plant's hourly workers. The closure could come as early as the first quarter of 2000, Kellogg said.
Kellogg said closing part of the plant, where it produces Corn Flakes and various other cereals, would cut costs by about $35 million to $45 million a year.
Cost cuts have been high on Kellogg's agenda after a year of fierce competition in the cereal market slashed the company's profits.
Kellogg's 1998 operating earnings fell 11.3 percent to $895.1 million, while sales for the full year fell 1 percent to $6.76 billion. In the first quarter of 1999, Kellogg's operating profits fell 25.5 percent to $222.7 million, although sales rose 6.2 percent to $1.75 billion.
This would mark the second round of job cuts announced at Kellogg in the last six months. Kellogg said in December it would cut about 765 jobs, or 20 percent of its salaried employees, in a bid to reduce costs.
``An integral part of our strategy is continuing to reduce costs and improve efficiency to enable greater reinvestment for profitable growth,'' said Carlos Gutierrez, president and chief executive officer of Kellogg.
Kellogg has struggled in recent quarters as demand for breakfast cereal has waned, replaced by more portable foods such as bagels and breakfast bars.
``This is a continuation of the efforts to become more efficient and reduce costs,'' Nomi Ghez, a food industry analyst at Goldman Sachs, said. ``It's no secret that the cereal business in the U.S. has shrunk over the years. This is an industry with overcapacity.''
Kellogg said it would ``explore all options'' to help those whose jobs are eliminated.
June 19, 1999
lomega to Cut Jobs, Warns of Quarterly Loss
lomega Corp. warned of a second-quarter loss due to continued weak sales of its Zip and Jaz disks and drives, and said it will cut 450 jobs, or nearly 10% of its work force, as part of a cost-cutting move. The Roy, Utah-based company expects to take a $45-million charge in the quarter as it fires temporary and regular workers, closes plants in San Jose and San Diego, writes off assets and consolidates some operations outside the United States. Iomega said it expects a loss in the range of 5 cents to 10 cents a share even without the charge. Analysts had been expecting the company to to break even with the 13-cent prof'it it earned in the year ago second quarter, according to First Call Corp. Iomega said a delay in shipping its Clik PC Card drive, which can be used to record photographs taken on digital cameras, also contributed to the loss.June 21, 1999
Shutdown shakes up West Virginia factory town
FRANKLIN, W.Va. - Jerry Bowers, at 39, has been making shoes more than half his life. Like many others in this Eastern Panhandle town, he had only one option when he joined the work force at age 17 - Hanover Shoe Co.But now Hanover's parent company plans to close the plant in January, shifting production overseas and putting 350 people out of work.
It's a business decision, even a common one. But the move will have a profound impact on the people of this small company town, who have long pinned their lives on the classic men's shoes made here.
"I may go into construction. Definitely, we'll have to travel," Bowers said, half-shouting over the clatter of industrial sewing machines. He vows to stay put until his teenage son finishes high school.
"We'll tough it out for two years and see what happens," he said. "We have been seeing it coming. We just weren't expecting a total shutdown."
Many factors have brought Hanover to this point - an unprofitable past, a change in tastes and an overall shift to manufacture shoes abroad.
Hanover's parent firm, C&J Clark International Ltd. of Somerset, England, once operated seven plants in North America. Hanover, which once employed 700 workers on two shifts, is the last. Work is now centered in Australia and England.
The coming closure is "one more step in the dismantling of the manufacturing economy of this country," said Glen Eisenhower, who took over supervising the plant in 1996.
When Eisenhower started, Hanover was suffering annual losses from $1.5 million to $3 million and carrying a 9 percent defect rate. Six months - and some managerial shuffling - later, its defect rate was down to 2 percent, and the plant was profitable.
"If this (shutdown) had happened three years ago, we could understand it," he said. "But not when it's making money."
Yet profits weren't all Hanover was up against.
The factory, which produces 4,500 pairs of wingtips, tassel loafers and other classic men's dress styles every day, specializes in what worker Leslie Dodrill calls "the old man's shoe," the kind that only looks right with a suit.
"They've been 'in' forever, but not anymore," she said.
Further, experts say about 85 percent of all shoes on the U.S. market are now imported. China is now America's largest shoe supplier.
"Manufacturing overseas has become a lot more sophisticated," said Michael Appell, president of Two/Ten International Footwear Foundation. Countries with low labor costs have developed better supplier networks, he said, and the Internet has made doing business faster and simpler.
There are a few manufacturers left in the United States, including Dexter Shoes and Eastland Shoe in Maine, and Munro & Co. in Arkansas. "But many American companies just can't compete," he said.
When factories close, the communities that suffer are often like Franklin - small, rural and predominantly white. Often, most of the workers are women.
To help, Appell's foundation provides social services, career training, referrals and counseling, as well as direct financial aid to those reluctant to relocate. This year, the foundation will distribute nearly $1 million to shoe-industry workers, some in direct aid to families but much of it as scholarships.
"A lot of people are just barely subsisting," Appell said. "They come to us for help because they can't make ends meet."
At Hanover, 125 miles east of Charleston, the average employee has been on the job for 16 years. About 60 percent are women, many of whom took the job for the insurance benefits. The base wage is $5.50 an hour, but the average employee earns between $8.50 and $9.
Pendleton County officials are already searching for a tenant to replace Hanover, and Clark, the parent firm, has donated $30,000 to the effort.
But it hasn't eased the concerns of residents, who wonder if Franklin - and America - will ever be the same.
"My fear," said Leslie Dodrill, "is that one of these days, all the things that say 'Made in the U.S.A.' won't be."
June 24, 1999
Nabisco to close Houston bakery
PARSIPPANY, N.J. - Nabisco Inc. says it will cease operations at its Houston bakery by Nov. 20 and cut approximately 425 workers in an attempt to reduce system-wide excess manufacturing capacity in the country.The bakery, which is located at 6803 Almeda Road, currently manufactures Ritz, Air Crisps Cheese Nips, Nabisco Graham crackers, and Chewy Chips Ahoy! chocolate chip cookies.
The food company says the closure will affect approximately 425 salaried and hourly employees.
Nabisco says the decision to close the facility follows extensive studies of its entire domestic bakery network which shows that its existing baking capacity exceeds its needs and is adding costs to the company's overall operations.
The facility, which was constructed in 1949, is one of the oldest bakeries in the Nabisco system.
The company said the unit's utilization rate is well below the competitive industry average and its current production can be accommodated within the other bakeries.
Nabisco says it will offer salaried employees a comprehensive package of severance pay, extended benefits and career planning services and will enter into discussions with union officials regarding severance benefits for hourly union employees.
The closure of the bakery is part of a broad company-wide restructuring program. Nabisco will remain a major employer in Texas with close to 1,000 people working in the state at its sales offices and distribution centers located in Houston, Dallas, El Paso, Irving, Lubbock, San Antonio and Corpus Christi.
June 25, 1999
ALLAS--CompUSA Inc.
ALLAS--CompUSA Inc., the nation's largest personal-computer retailer, said Thursday that it will slash its work force by as much as 7% and add consumer electronics to its merchandise mix to rely less on low-profit PC sales. CompUSA also said it will close as many as 14 of its 211 superstores and hire an outside distributor to fulfill bulk PC orders in its reorganization designed to boost sagging profit. The various moves will eliminate as many as 1,500 of its 21,000 jobs and result in charges of as much as $50 million, or 54 cents a share, in the fiscal fourth quarter, the retailer said.CompUSA posted a loss or declining profit in each of the last five quarters. It's been hurt by falling PC prices and competition from online retailers, consumer electronics retailers and direct PC sellers. Dallas-based CompUSA is the only U.S. retailer operating superstores devoted mainly to selling PCs. It bought its main rival, Computer City, from Tandy Corp. last year.
The retailer is looking for ways to boost sales as PC prices have continued to fall, analysts said. The company said it's testing new store layouts at certain locations. All stores will see changes in merchandise categories by the holiday shopping season, though computers will still make up the bulk of the business, CompUSA said. CompUSA's shares fell 50 cents to close at $7.69 on the New York Stock Exchange.
June 30, 1999
Albertson's to Lay Off Workers in Brea
Albertson's Inc. said it will lay off an undisclosed number of workers at its Brea distribution center as it relinquishes stores to win approval of its $9.8-billion acquisition of American Stores Co.Michael Read, spokesman for Boise, Idaho-based Albertson's, declined to say how many workers are likely to lose their jobs at the center, which has about 760 employees, mostly warehouse workers and drivers. Albertson's is working with Teamsters Local 952 of Orange and the Employment Development Department to help "soften the blow" for workers, Read said.
Some employees may be rehired by grocery companies that are buying the stores Albertson's is selling, Read said. Union officials could not be reached for comment.
Albertson's, which also owns Max Grocery stores, said last week that it would divest 117 stores in California to win antitrust approval of its acquisition of American, which owns Lucky stores.
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