Layoff Numbers: A (Pink) Slippery Subject
Perhaps the darkest side of the current downturn in the telecom industry is the toll it's taking on companies' human resources -- people, that is.
Granted, staff reductions are a fact of life when it comes to cutting costs. Unfortunately, companies rarely predict accurately off the bat just how many folk they'll be letting go. All too often, the news trickles out in a grim progression of cuts, often preceded by a spate of rumors and "inside" information.
Lucent Technologies Inc. (NYSE: LU), for example, won't confirm or deny a report in today's Wall Street Journal that it's weighing the layoff of 10,000 people, over and above the cuts it's already acknowledged.
"All we're saying is that we're on track with previously announced reductions," says a Lucent spokesperson. "And we continue to evaluate our plans at every juncture."
So far, those plans include a layoff of 10,000 of the company's 104,000 employees this year, plus "a number more than 10,000" (the Journal says 13,000) who are being offered early retirement packages.
In addition, Lucent will lose another 12,000 or so employees by selling its Optical Fiber Solutions Group in Norcross, Ga., as well as two plants in Oklahoma City and Columbus, Ohio. Although the total employees from these three locations number about 15,300, Lucent says not all of the Columbus employees are involved in manufacturing, so they won't be going with the new buyers.
Lucent isn't alone in making its headcount figures a moving target. There are many reasons why companies aren't able to give forthright figures on staff losses or layoffs. First, there's a need to maintain shareholder perception of the firm as a going concern -- not to mention the faith and morale of employees.
These seemed to be at the root of efforts by PR folk at Nortel Networks Corp. (NYSE/Toronto: NT) to hold reporters at bay as long as possible (see Nortel to Cut 4,000 Jobs). But Nortel's current pink-slip projection of 30,000 (see Nortel's Nuclear Winter) -- the highest in the industry -- stands in ironical contrast to the firm's attempts to stifle media coverage of 4,000 layoffs early on.
Now that so many firms are being forced to lay off staff, companies seem more forthcoming. Cisco Systems Inc. (Nasdaq: CSCO), for instance, has stated it plans to let go 8,500 (roughly 20 percent) of its staff before year end.
Sometimes companies fear legal repercussions from announcing layoffs. Alcatel SA (NYSE: ALA; Paris: CGEP:PA) refuses to provide any figures at all on its worldwide layoffs -- although it acknowledges roughly 1,265 in the U.S. so far this year. International labor laws, in some places much more stringent than those in North America, could embroil Alcatel in unwanted turmoil if it got its numbers out early or wrong.
Often, the total headcount may depend on the success of other restructuring methods. Lucent, for instance, will succeed in trimming numbers significantly without laying off folk, as it sells a number of its properties.
The same holds for Alcatel, which confirms that it's planning to close the overwhelming majority of its worldwide manufacturing plants this year. The firm has begun this process, as indicated by announcements this week (see Planting for the Future). Alcatel also will lose a sizeable number of employees as it proceeds to close or to sell off its various nonstrategic businesses (see Alcatel: What's Next?).
Interestingly, Alcatel insists it will hold onto its optical component and space manufacturing concerns. "Wherever we have proprietary technology, prototypes, or initial products, we will keep those," says a spokesperson.
- Mary Jander, Senior Editor, Light Reading