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Via Workers World News Service
Reprinted from the Aug. 24, 2000
issue of Workers World newspaper
-------------------------Behind ‘economic prosperity’
Mergers consolidate wealth, signal layoffs
By Gery Armsby
As politicians campaigned on the coattails of the so-called capitalist boom, Exxon Mobil, Qwest/U.S.West, First Union, Bank of America, First Data, and Conseco all announced major layoffs.
Bank of America leads the herd with a proposed 7 percent cut in its current work force--this after axing an initial 7 percent of the nearly 162,000 workers it employed one year ago. Its total layoffs will reach as high as 22,000 by next year.
Bank of America is the second biggest bank in the United States--a result of the 1998 East Coast/West Coast merger between San Francisco-headquartered BankAmerica Corporation and NationsBank, based in the Southeast.
Another banking giant, First Union Corp., will up its original layoff projections made in June from 3,500 to over 5,000 jobs cut. In order to slice away these workers, the bank plans to spend $135 million on consultants and severance pay.
British-owned Standard Chartered PLC reported it plans 6,000 layoffs in its Asia-based banking operations as part of a restructuring drive that is likely to cost $720 million.
Qwest, a telecomm leader that recently merged with U.S. West communications, will cut between 2,000 and 4,000 jobs in the coming months.
Workforce cuts have sprung from various sectors and industries including energy, insurance and banking, technology and communications, and the dot-com enterprises. Many of the layoffs are directly tied to recent mergers.
All these companies' layoffs were announced to Wall Street brokers after second-quarter earnings reports. They were framed, for the most part, as restructuring or "rightsizing" initiatives.
Greedy top executives and investment bankers--nervous about flat earnings reports--generally welcomed the layoffs as a signal that costs are being diligently pared down to increase profits. Some investors were reportedly relieved by the layoffs, having previously feared many companies were hoarding employees.
Executives do not hide the fact that they want to squeeze as much profit as they can out of each worker. They court investors with their projections and boast about the "earnings potential" of the layoffs.
Qwest officials put this very clearly. They said that although each of their current employees brings in well over a quarter of a million dollars in revenues on average, they want to cut the work force and increase revenues at the same time.
The combined 72,000 Qwest/ U.S. West employees generate over $18 billion annually. Qwest wants to cut jobs and build revenues up to the $24 billion mark.
Bank of America Chief Financial Officer James Hance told the same story in another way. He said he will slash jobs to improve the bank's "efficiency ratio" from 54 to 50.
This ratio reflects the cost of generating each dollar of income. In order to squeeze an extra eight cents out of every dollar spent, Hance will relentlessly hack away jobs.
Dot-com and wireless layoffs
According to "The Standard," a Web site featuring research on the Internet economy, over 9,000 layoffs have occurred in the dot-com and wireless sectors so far this year. One hundred seventeen very small to very large Internet-based companies reported between 10 and 1,500 layoffs.
NBC's Internet division bought out Xoom and Snap.com in 1999 to form NBCi. On Aug. 8, NBCi laid off 170 Internet workers, a 20-percent cut.
Deutsche Telekom let 1,500 workers go after taking over VoiceStream wireless in July. Qualcomm, another wireless company, cut 200 jobs at the end of June.
Corel, maker of WordPerfect software, severed 320 employees in June to save $40 million in costs annually.
Agilent, formerly a health-care-technology subsidiary of Hewlett-Packard, announced Aug. 14 it intends to cut 450 jobs by November to "boost efficiency."
A common refrain among technology companies handing out layoff notices to their workers is "rightsizing"--a close relative of "downsizing."
Even in a period of capitalist boom, when outrageous fortunes are being accumulated through mega-mergers, those in traditionally more secure jobs, along with millions of workers around the world, are threatened by the slings and arrows of restructuring.
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