The latest bad financial news from the gaming industry comes from Sega. The Japan-based publisher just announced its latest numbers and the results are not good. In fact they are bad enough that the company has announced plans to lay off 560 of its worldwide employees (Sega has about 3,100 employees). The company will record a loss of over $235 million, according to Kotaku.
A few weeks ago, it was reported that Sega's US branch had laid off 30 of its employees (A spokesperson later confirmed there were layoffs but would not confirm specific numbers). The new press release states that in order to save costs, Sega will cut 20 percent off its research and development budget which likely means a number of upcoming games could be canceled.
Saturday, April 4, 2009
Life After a Layoff
Reggie Case* doesn't need a regular paycheck to make him feel secure. He's already decided he can survive this recession. But a stable income and benefits were nice while they lasted.Reggie, 42, husband, father of two, and a lifelong construction worker with only a high-school degree, left the comforts of a company job behind in May 2008. Reggie saw his layoff coming. In fact, he even helped his boss decide it was time to let him go. For 16 years Reggie was at the center of a small construction and manufacturing company in a suburb of Cleveland. He managed every aspect of it - from leading construction projects to managing commercial property spaces. "I was deep in the business. I knew all their clients, bankers, everyone," he explains. So it was easy for him to see a shift was underway. "I knew a year in advance," he notes. "It wasn't discussed. But anyone smart enough could see that the business they were getting was getting smaller." He responded at the first sign of trouble. "I always have had something on the side. So I would take on more side work. I was preparing for a transition," he says. When spring 2008 arrived and no big summer construction gigs were on the docket, Reggie gave himself and his close friends, the owners, a chance to make a smart decision."I brought them into my office and said, 'How long are we going to pretend I have something to do?'" he explains. While they were surprised by his honesty, the owners admitted they had fretted for months over when and how to let him go. Reggie departed soon after their candid conversation.
Reggie's side work quickly turned into a business of its own. There are pros and cons, he says, of going solo."Business is tough, but it's there," Reggie says. "A lot of getting a job is just about showing up." Regarding the state of the construction industry, he says, "Big business will not be there, like it was, because no one is spending on big construction." He's developed an optimistic response to losing his seat on the gravy train. "I call myself the 'King of the Bottom Feeders.' The only way to make money is to be out there, using word of mouth and taking the little [jobs]," he says. Reggie will take nearly any job -- any time, any size. He makes money from the small projects most construction managers won't consider.But all this hustle carries a cost. Besides not knowing where the next check is coming from, making himself constantly available requires stamina. "Instead of getting home at 5 p.m. and turning the phone off, it's on all evening. And if you need to look at a job on a weekend or evening, you fit it in. You get it done," Reggie says. Why not get a new gig with a different company? Reggie is hooked on his new favorite perks: more family time and the freedom to set his own schedule."I love that I can be with my family more," he says. "Time with your family? That's time you can't get back. Having that handed to me at such a young age is getting a raise."Plus, his day is his own. "I decide where I go and what I can do. I don't have the guilt of the bosses or the company when something else comes up during the day," he says.His family, meanwhile, has been very supportive. Reggie says, "My wife? To say she's been great would be an understatement. She's always felt I was someone who needed to be on his own. There was a relief for her, I think."Reflecting on his bold decision to approach his former employer about laying him off, he says, "I wasn't giving up anything, because there wasn't going to be anything there next May."When asked if he was angry about losing his job, Reggie quickly responds, "That's business. You do that sort of thing in business." While he admits the situation initially irked him, he's moved on. In fact, he ended things so well at his old company, his former bosses now send him business.Reggie offers this advice to all who have recently lost their jobs: "They have to realize that the money that they made and the job that they had is going to be dramatically different for the rest of their lives. You're going to have to get creative to make money. This isn't going to change soon, either."*The source's name has been changed for privacy purposes.
Reggie's side work quickly turned into a business of its own. There are pros and cons, he says, of going solo."Business is tough, but it's there," Reggie says. "A lot of getting a job is just about showing up." Regarding the state of the construction industry, he says, "Big business will not be there, like it was, because no one is spending on big construction." He's developed an optimistic response to losing his seat on the gravy train. "I call myself the 'King of the Bottom Feeders.' The only way to make money is to be out there, using word of mouth and taking the little [jobs]," he says. Reggie will take nearly any job -- any time, any size. He makes money from the small projects most construction managers won't consider.But all this hustle carries a cost. Besides not knowing where the next check is coming from, making himself constantly available requires stamina. "Instead of getting home at 5 p.m. and turning the phone off, it's on all evening. And if you need to look at a job on a weekend or evening, you fit it in. You get it done," Reggie says. Why not get a new gig with a different company? Reggie is hooked on his new favorite perks: more family time and the freedom to set his own schedule."I love that I can be with my family more," he says. "Time with your family? That's time you can't get back. Having that handed to me at such a young age is getting a raise."Plus, his day is his own. "I decide where I go and what I can do. I don't have the guilt of the bosses or the company when something else comes up during the day," he says.His family, meanwhile, has been very supportive. Reggie says, "My wife? To say she's been great would be an understatement. She's always felt I was someone who needed to be on his own. There was a relief for her, I think."Reflecting on his bold decision to approach his former employer about laying him off, he says, "I wasn't giving up anything, because there wasn't going to be anything there next May."When asked if he was angry about losing his job, Reggie quickly responds, "That's business. You do that sort of thing in business." While he admits the situation initially irked him, he's moved on. In fact, he ended things so well at his old company, his former bosses now send him business.Reggie offers this advice to all who have recently lost their jobs: "They have to realize that the money that they made and the job that they had is going to be dramatically different for the rest of their lives. You're going to have to get creative to make money. This isn't going to change soon, either."*The source's name has been changed for privacy purposes.
Friday, April 3, 2009
Layoff Tracker
March's tally of job cuts -- 663,000 -- was slightly higher than expected, as the total number of out-of-workers (13.2 million) brought the unemployment rate to 8.5 percent, a level not seen since 1983. That figure has climbed 1.8 percent since November, and 3.6 points since analysts say the recession began in December 2007. As has been the case in recent months, layoffs have affected just about every industry -- only healthcare and education managed to add workers in March. In all, the recessional economy has lost 5.1 million jobs, thanks in part to a restatement (upwards, of course) of January's totals to 741,000.
In Taiwan, unpaid leave instead of layoffs carries its own cost
Reporting from Hsinchu, Taiwan -- As California and the rest of the nation stagger from massive layoffs and soaring unemployment, companies in Taiwan have largely opted to cut pay and work hours to deal with the economic crisis.
Here in Hsinchu Science Park, modeled after California's Silicon Valley, about 100,000 of its 130,000 workers are taking up to 10 days of unpaid leave a month.
Part of the reason is pressure from Taiwan's government, they say. Another may be the cost: Taiwanese laws require companies to pay severance of one month's salary for every year of service. There's also a cultural factor.
"The Western way is just too brutal," said Chang Chia-yua, 28, an engineer who supervises production for a computer memory maker in Hsinchu.
In the U.S., corporations have generally balked at across-the-board pay cuts and leaves as an antidote to a business downturn. As companies eliminate jobs at a furious pace, some managers see layoffs as an opportunity to prune their staffs and keep the strongest performers.
Their logic: "You reduce wages and you might piss everybody off, whereas if you dump some of them on the street, they're gone and you don't have to worry about them," said Jim Klein, an adjunct economics professor at Savannah Technical College in Georgia who has three decades of industrial relations and corporate experience in Taiwan.
Sharing the pain with everyone may not be the most efficient approach, people here concede, but at least everybody has a job. It gives some security to workers and also has helped curb the island's unemployment rate, which hit 5.3% in January, up 1.5 percentage points from a year ago. California's jobless figure rose almost as much in a single month, spiraling to 10.1% in January. (The U.S. rate was 8.1% in February.)
But as Chang and others in Hsinchu are finding out, the Taiwanese way can be pretty cruel too -- and may in the end prove no better than layoffs for some people.
When his company started to get walloped by the global financial crisis in November, Chang and his colleagues were told to take three or four days off without pay that month. Chang didn't mind so much at first; the single engineer used the time to volunteer at a nearby hospital, greeting and helping patients and their families with their questions.
But then, as business fell further this year, Chang's employer, whom he was reluctant to identify, told workers to take eight or nine days off a month. In February, that sliced a third of Chang's $1,325 monthly salary. Worse, he and others fear that eventually there will be layoffs.
"The atmosphere in the company is pretty nervous these days," he said. "After all, we have been having unpaid leave for so long."
So fearful are some workers that they're going into the offices on their stay-at-home days to impress bosses in the hope of keeping their names off any existing or future layoff list.
"It sucks," said a 40-year-old engineer for a flat-panel screen manufacturer, who would only give his last name, Tsai, because he didn't want to draw any attention and increase the risk of losing his job.
Tsai was sitting in a dimly lit Starbucks on a rainy February afternoon at Hsinchu's leafy campus, commiserating with a fellow engineer who was also on unpaid leave. Both men said their bonuses had been eliminated and that they were currently required to take one day off a week.
Tsai's rest day was Friday, but he didn't take a long weekend trip with his wife and two children. "We don't go shopping anymore. We eat at home." In fact, he went to work that day.
"I just show up and try to tell the boss I'm still working," he said with a wry smile. "I don't know what else I can do."
In recent months, distraught workers from Hsinchu and elsewhere have massed in the capital city, Taipei, to complain about their shrinking paychecks as employers add more days of unpaid leave. In one demonstration, workers hoisted rice bowls and banners saying, "No Work, No Pay," and demanded that the government stop employers from forcing workers to take leaves and cutting workers' pay below the national monthly minimum wage of about $500.
So far this year, the 430 companies at Hsinchu Science Park have largely held the line on mass layoffs, said Tu Chi-hsiang, deputy director-general of Hsinchu park, which is run by the Taiwanese government.
For all of last year, he said, about 4,400 people lost their jobs, mostly in the fourth quarter. Most of them were temporary employees and contracted foreign workers, mainly from the Philippines.
Overall, the figure pales next to job cuts announced recently by companies in California's Silicon Valley: 24,000 at Hewlett-Packard; up to 6,000 at Intel; 5,000 to 6,000 at Sun Microsystems; 1,500 to 2,000 at Cisco Systems; and more than 1,000 each at Yahoo and eBay.
"The U.S. is more efficient in operations," said Scott Huang, an associate researcher at Hsinchu's administration. "We pay more attention to tradition."
As in Japan and South Korea, larger Taiwanese companies tend to be more paternal, and workers still cling to Confucian values of loyalty and identify with their employer.
Huang says many workers are making good use of their unpaid leave. Some are taking training courses in management subsidized by the government. One large group of engineers and technicians, he says, formed a cycling club, riding up the hills in nearby Fei-feng Mountain on their days off.
Hsinchu itself evokes images of Silicon Valley, with its tree-lined streets, low-rise buildings and dorm-style apartments. The science park, about 45 miles southwest of Taipei, is dominated by manufacturers of semiconductors, computers and peripherals -- Taiwan's mainstay exports, which have been clobbered by the global economic downturn.
Siliconware Precision Industries, one of Hsinchu's largest companies with 15,000 workers, shows just how fast and hard sales have fallen. Siliconware supports semiconductor companies, assembling and testing wafers.
"Prior to the fourth quarter [of 2008], we were doing very well," said Janet Chen, investor relations director. Then the bottom fell out: Revenue plunged more than 50% in January from the previous year. Sales were off 35% last month.
Siliconware began by cutting expenses, including phone bills, travel and entertainment. Salaries were slashed 10% to 15%. About 200 mostly temporary workers were let go, Chen said. Then, most everybody else was told to take four to six days of unpaid leave a month.
"Management doesn't want to cut jobs right away," Chen said. "It's very sensitive. . . . The government may say something."
Taiwanese officials worry about social unrest and other destabilizing effects of mass layoffs, including further erosion in consumer spending, exacerbating the pain and deepening the recession.
One weapon the government uses to press its case with employers is the threat of restricting future entry of foreign workers, says Wu Yu-jen, an associate professor of labor relations at National Chung Cheng University in Taiwan's Chia-yi County.
Wu says Taiwanese companies had recruited about 380,000 foreign workers, predominantly from Southeast Asia, to work in factory and other jobs that were previously hard to fill. Thousands of them have been let go in recent months, but when the economy improves, employers will need government approvals to bulk up again.
"The government can freeze the number of foreign workers if they don't listen," Wu said. On the positive side, he said, Taiwan has been giving training subsidies for each worker on leave.
Wu and other analysts say it's too early to tell how long Taiwan's no-layoff stand will last.
In the short term, it could be cheaper to put people on leave than pay severance for layoffs. And if business rebounds soon, companies will be positioned to ramp up production quickly by adding hours.
But if the unpaid leaves drag on, that could demoralize the staff and add to the financial hardship for employees and the company.
"It really comes down to your best-guess estimate: How long is this going to last?" said Klein, the Georgia economics professor and consultant to businesses in Taiwan. "It's tough, tough, tough," he added, because the outlook is so foggy.
"There's no visibility," he said. "You've got to make a gamble in this environment."
Cao Jun in The Times' Shanghai bureau contributed to this report.
Here in Hsinchu Science Park, modeled after California's Silicon Valley, about 100,000 of its 130,000 workers are taking up to 10 days of unpaid leave a month.
Part of the reason is pressure from Taiwan's government, they say. Another may be the cost: Taiwanese laws require companies to pay severance of one month's salary for every year of service. There's also a cultural factor.
"The Western way is just too brutal," said Chang Chia-yua, 28, an engineer who supervises production for a computer memory maker in Hsinchu.
In the U.S., corporations have generally balked at across-the-board pay cuts and leaves as an antidote to a business downturn. As companies eliminate jobs at a furious pace, some managers see layoffs as an opportunity to prune their staffs and keep the strongest performers.
Their logic: "You reduce wages and you might piss everybody off, whereas if you dump some of them on the street, they're gone and you don't have to worry about them," said Jim Klein, an adjunct economics professor at Savannah Technical College in Georgia who has three decades of industrial relations and corporate experience in Taiwan.
Sharing the pain with everyone may not be the most efficient approach, people here concede, but at least everybody has a job. It gives some security to workers and also has helped curb the island's unemployment rate, which hit 5.3% in January, up 1.5 percentage points from a year ago. California's jobless figure rose almost as much in a single month, spiraling to 10.1% in January. (The U.S. rate was 8.1% in February.)
But as Chang and others in Hsinchu are finding out, the Taiwanese way can be pretty cruel too -- and may in the end prove no better than layoffs for some people.
When his company started to get walloped by the global financial crisis in November, Chang and his colleagues were told to take three or four days off without pay that month. Chang didn't mind so much at first; the single engineer used the time to volunteer at a nearby hospital, greeting and helping patients and their families with their questions.
But then, as business fell further this year, Chang's employer, whom he was reluctant to identify, told workers to take eight or nine days off a month. In February, that sliced a third of Chang's $1,325 monthly salary. Worse, he and others fear that eventually there will be layoffs.
"The atmosphere in the company is pretty nervous these days," he said. "After all, we have been having unpaid leave for so long."
So fearful are some workers that they're going into the offices on their stay-at-home days to impress bosses in the hope of keeping their names off any existing or future layoff list.
"It sucks," said a 40-year-old engineer for a flat-panel screen manufacturer, who would only give his last name, Tsai, because he didn't want to draw any attention and increase the risk of losing his job.
Tsai was sitting in a dimly lit Starbucks on a rainy February afternoon at Hsinchu's leafy campus, commiserating with a fellow engineer who was also on unpaid leave. Both men said their bonuses had been eliminated and that they were currently required to take one day off a week.
Tsai's rest day was Friday, but he didn't take a long weekend trip with his wife and two children. "We don't go shopping anymore. We eat at home." In fact, he went to work that day.
"I just show up and try to tell the boss I'm still working," he said with a wry smile. "I don't know what else I can do."
In recent months, distraught workers from Hsinchu and elsewhere have massed in the capital city, Taipei, to complain about their shrinking paychecks as employers add more days of unpaid leave. In one demonstration, workers hoisted rice bowls and banners saying, "No Work, No Pay," and demanded that the government stop employers from forcing workers to take leaves and cutting workers' pay below the national monthly minimum wage of about $500.
So far this year, the 430 companies at Hsinchu Science Park have largely held the line on mass layoffs, said Tu Chi-hsiang, deputy director-general of Hsinchu park, which is run by the Taiwanese government.
For all of last year, he said, about 4,400 people lost their jobs, mostly in the fourth quarter. Most of them were temporary employees and contracted foreign workers, mainly from the Philippines.
Overall, the figure pales next to job cuts announced recently by companies in California's Silicon Valley: 24,000 at Hewlett-Packard; up to 6,000 at Intel; 5,000 to 6,000 at Sun Microsystems; 1,500 to 2,000 at Cisco Systems; and more than 1,000 each at Yahoo and eBay.
"The U.S. is more efficient in operations," said Scott Huang, an associate researcher at Hsinchu's administration. "We pay more attention to tradition."
As in Japan and South Korea, larger Taiwanese companies tend to be more paternal, and workers still cling to Confucian values of loyalty and identify with their employer.
Huang says many workers are making good use of their unpaid leave. Some are taking training courses in management subsidized by the government. One large group of engineers and technicians, he says, formed a cycling club, riding up the hills in nearby Fei-feng Mountain on their days off.
Hsinchu itself evokes images of Silicon Valley, with its tree-lined streets, low-rise buildings and dorm-style apartments. The science park, about 45 miles southwest of Taipei, is dominated by manufacturers of semiconductors, computers and peripherals -- Taiwan's mainstay exports, which have been clobbered by the global economic downturn.
Siliconware Precision Industries, one of Hsinchu's largest companies with 15,000 workers, shows just how fast and hard sales have fallen. Siliconware supports semiconductor companies, assembling and testing wafers.
"Prior to the fourth quarter [of 2008], we were doing very well," said Janet Chen, investor relations director. Then the bottom fell out: Revenue plunged more than 50% in January from the previous year. Sales were off 35% last month.
Siliconware began by cutting expenses, including phone bills, travel and entertainment. Salaries were slashed 10% to 15%. About 200 mostly temporary workers were let go, Chen said. Then, most everybody else was told to take four to six days of unpaid leave a month.
"Management doesn't want to cut jobs right away," Chen said. "It's very sensitive. . . . The government may say something."
Taiwanese officials worry about social unrest and other destabilizing effects of mass layoffs, including further erosion in consumer spending, exacerbating the pain and deepening the recession.
One weapon the government uses to press its case with employers is the threat of restricting future entry of foreign workers, says Wu Yu-jen, an associate professor of labor relations at National Chung Cheng University in Taiwan's Chia-yi County.
Wu says Taiwanese companies had recruited about 380,000 foreign workers, predominantly from Southeast Asia, to work in factory and other jobs that were previously hard to fill. Thousands of them have been let go in recent months, but when the economy improves, employers will need government approvals to bulk up again.
"The government can freeze the number of foreign workers if they don't listen," Wu said. On the positive side, he said, Taiwan has been giving training subsidies for each worker on leave.
Wu and other analysts say it's too early to tell how long Taiwan's no-layoff stand will last.
In the short term, it could be cheaper to put people on leave than pay severance for layoffs. And if business rebounds soon, companies will be positioned to ramp up production quickly by adding hours.
But if the unpaid leaves drag on, that could demoralize the staff and add to the financial hardship for employees and the company.
"It really comes down to your best-guess estimate: How long is this going to last?" said Klein, the Georgia economics professor and consultant to businesses in Taiwan. "It's tough, tough, tough," he added, because the outlook is so foggy.
"There's no visibility," he said. "You've got to make a gamble in this environment."
Cao Jun in The Times' Shanghai bureau contributed to this report.
One layoff leads to another
When customers sit beneath an intricate gold mural, order kung pao chicken and confide that they've just lost their jobs, waitress Alice Lau understands their hurt and fear. She's feeling the pinch too, as the repercussions of decisions made by others trickle down to her.
Her hours at the Great Wall Chinese restaurant have been cut because regulars such as Rogelio Valdez can no longer afford dinners out. Some customers come in for one last meal to tell her they've been laid off, then disappear.
Valdez, a barber, said business at his shop was down. He no longer sees customers such as Dave Vasquez, who shaved his head to avoid spending money on haircuts.
Vasquez had worked as a nanny for Bill Maxwell. But when Maxwell lost his job with a Pasadena video game company, he was forced to let Vasquez go. The start-up had no money to pay its workers after a major publisher, spooked by signs that the country's economic troubles were worsening, canceled a contract in August.
As the recession deepens across the country, touching millions of individuals, it links people through countless cutbacks and layoffs. One job loss leads to another, much the way a wobbly domino can topple the whole row.
Minor financial decisions -- a penny pinched here, a dollar saved there -- build, rippling through a chain of strangers.
::
The loft in Pasadena's antiques district was funky, with Victorian chandeliers, exposed brick and a bathroom plastered with turquoise tiles. It seemed the perfect space for the video game start-up, WhiteMoon Dreams.
Founders Scott Campbell, 36, and Jay Koottarappallil, 32, moved out of their home offices and into the rented loft in August 2007. Soon after, a major video game publisher agreed to buy the shoot-'em-up game they were developing. The pair hired a dozen people and a handful of contractors. Everything seemed to be coming together.
Then the stock market started its free fall. Publishers grew skittish about spending money. The founders could see calamity coming, like someone anticipating the breakup of a relationship but powerless to do anything about it.
Last summer, a year after agreeing to the sale, they were crushed when the publisher, which they would not name for legal reasons, said it could no longer buy the game and brought in lawyers to unwind the deal.
But the founders didn't want to give up. They told employees they could stay -- if they didn't mind working for free. Six remained and have picked up a little work, but nothing yet that could revive the company's fortunes.
The stress is accumulating as WhiteMoon Dreams prepares to show off the game -- appropriately named Salvation -- at the Game Developers Conference this month. The founders hope to find a buyer for the project or a publisher that will hire the company to write something new.
Campbell and Koottarappallil feel the pressure of coming to work every day and not knowing whether it will be the last, of depending on family and friends and the unemployment office for money to survive, of watching yet another rent deadline or mortgage payment approach, of wondering who among them might decide to call it quits.
"Everything's on hold," Campbell said. "It's a waiting pattern to see how everything shakes out."
They set a Dec. 31 deadline to shut down the company but couldn't pull the trigger. They sit, work and wait. But some of their employees and contractors couldn't do the same.
Bill Maxwell, a writer who created plots and dialogue for the game, had a family to support and needed a salary. His initial contract ran out in June with an understanding he'd start another job for WhiteMoon Dreams in November.
But when the publisher backed out of the video game deal, the company couldn't afford to hire him again. Without any work on the horizon, Maxwell had to make some changes of his own.
Maxwell and his wife, Nikki, can rattle off a long list of things they've done without since he stopped working for WhiteMoon Dreams.
Their kids, ages 9, 6 and 3, are familiar with them too: No more sushi, lattes or Whole Foods groceries. No trips to Disneyland, indoor playgrounds or bowling alleys. No new books or DVDs. No fixing the tub in their second bathroom. No healthcare.
Bill, 41, spends hours sitting in the study of the family's one-story home in North Hills, searching Craigslist for jobs as leafy trees gently tap on the windows. A child's drawing taped to the bookshelf says, in shaky writing, "I am thankful for my dad."
Nikki, 39, was laid off from a job writing grants at a charter school last fall. When money grew tight, she surrendered to friends' counsel and picked up staples at a food bank in the Valley, although she was more used to donating and volunteering there. She choked up when, in addition to rice, beans and canned vegetables, she was given a sheet cake to share with her children.
Grief and anger have swamped the Maxwells at times, causing them to wonder whether things will ever change. How long can you look for a job without losing hope?
It's been tough, they say, being consigned to their cluttered home. They have spent days in sweat pants, stepping over crayons, guitars and piles of toys, and having to say no when their son asks for a Popsicle because there's just not enough money for treats.
"We had to make some hard choices," Nikki said, tucking a yoga mat into a wicker basket and glancing outside at a child's bike abandoned in the middle of the yard. "The bottom line is, I still have to feed my family."
That meant adding one more thing to the do-without list: their good friend and live-in nanny of six years, Dave Vasquez.
On a warm day in January, Vasquez peered in the mirror and saw a carless, cashless vagabond looking back at him. His eyes were bleary from nights of tossing and turning on couches, his skin sallow from eating TV dinners. His hair was scraggly and needed a cut.
Life changed dramatically after the Maxwells laid him off in August. Vasquez began a routine of couch surfing and job hunting, living off food stamps, taking buses around Northridge to look for work, hoping employers wouldn't mind that he had been arrested once years ago -- for stealing a loaf of bread.
Days meant heading to the employment office or scavenging for cigarette butts that, when combined, might contain enough tobacco for a smoke. Nights, he waited for darkness so he could retreat into the reprieve found only in sleep.
"You just do what you have to do to make sure tomorrow comes," Vasquez said.
Worst were the days spent in offices waiting for food stamps. He couldn't help thinking that he didn't belong, that he was different from the people there.
Each week, more people seemed to show up at the employment office looking for work, and the 36-year-old Vasquez wondered how he could compete. His scattered resume listed jobs at comic-book shops and in construction, as a cooking instructor and a record-store clerk.
So when Vasquez stared in the mirror on that January day, five months after being laid off, he knew he needed to look more professional. He glanced in his wallet and saw that he didn't have enough cash for a cut from one of the barbers he had frequented in the Valley.
Vasquez then picked up a 10-year-old pair of clippers, pulled off the plastic guards and shaved his head.
Proof of the sputtering economy has crept close to Rogelio Valdez's storefront on Reseda's Tampa Avenue. His neighbors' windows are covered with filthy "now leasing" signs. On the median, posters announce blowout sales at fabric stores and mattress warehouses.
Inside, Valdez's old-fashioned barbershop looks immune to the passage of time. From two framed paintings, Marilyn Monroe winks at the men sitting in red leather barber chairs so old they have built-in ashtrays. The red, white and blue barber pole rotating outside matches the tinfoil American flags that flutter above the door.
But not even a business offering $12 haircuts is spared the fallout when people such as Vasquez decide to scrimp. Things began to slow in January, Valdez said, and supply costs kept climbing: shampoo and scissors, hair spray and after-shave, trimmers and razor blades. So far this year, business is down 20%.
"The whole world's cutting back," he said.
Valdez, 64, now works longer hours -- seven days a week from 9 a.m. to 6:30 p.m., except Sundays, when he closes a little early to visit family in the Valley.
It's just bad timing, he said, that things started to slow seven months after he and his wife took over Medina's Barbershop from its previous owner, who had retired.
Valdez has been a barber for 40 years. Now he's working for himself, just as he had hoped to do as a young boy in Jalisco, Mexico. He decided then to enter the trade because he was told he could cut hair his whole life, even as an old man. He's glad that he's able to work extra hours to keep his doors open.
Not that it won't take some sacrifices, Valdez said as he brushed hair from a customer's shoulders. No more vacations to Las Vegas. No more unnecessary long car rides when the price of gasoline seems as unpredictable as the traffic patterns on the commute from his home in South-Central Los Angeles. No more dinners out at his favorite restaurant, the Great Wall, a few blocks away.
During the lunch rush, business at the Chinese restaurant is sluggish. Bowls of fried won tons line the counter, uneaten. Blue-and-white dishes are set atop empty tables as if waiting for a party to begin.
When people such as Valdez stopped coming in for meals, Great Wall owner Wilson Chien was determined not to fire any of his 11 staffers. He instead reduced each employee's hours by one day a week.
For Alice Lau, the $600-a-month pay cut means more years of pouring tea and delivering steaming plates of food.
"I'm getting older, I wanted to retire, but my investments went down a lot," she said, her short hair showing barely a trace of gray against her uniform of white tuxedo shirt and black bow tie.
Lau, 51, has seen hard times before. She emigrated from Hong Kong at 18 with a fifth-grade education and earned a living sewing in backrooms of tailor shops. She divorced and raised her three children alone. The Chinese restaurant she bought tumbled to the ground during the 1994 Northridge quake as if it were made of twigs.
Her kids are grown now. But one son is a student and her daughter works at a movie theater, so they still live at home, and Lau pays their insurance and cellphone bills. They try to help her with their salaries whenever they can.
"We're just hanging on," she said.
She's lucky though, Lau says as she shuffles between tables, placing a bowl of noodles here, a plate of fried pineapple balls there. She has good kids who "came up well" and a job she loves.
Still, Lau has had to make changes to make ends meet. She eats dumplings at home instead of dim sum in Alhambra. She blow-dries her hair rather than make weekly visits to Kim's Upper Cut, the salon next door. Her son does the yardwork at their West Hills home; Lau decided she could no longer afford the gardener who came weekly.
The gardener and the hairdresser surely pared their budgets too, adapting to the slowing economy. The ripple effect continues, although those affected may not know how they were swept up in it or where it might end.
Her hours at the Great Wall Chinese restaurant have been cut because regulars such as Rogelio Valdez can no longer afford dinners out. Some customers come in for one last meal to tell her they've been laid off, then disappear.
Valdez, a barber, said business at his shop was down. He no longer sees customers such as Dave Vasquez, who shaved his head to avoid spending money on haircuts.
Vasquez had worked as a nanny for Bill Maxwell. But when Maxwell lost his job with a Pasadena video game company, he was forced to let Vasquez go. The start-up had no money to pay its workers after a major publisher, spooked by signs that the country's economic troubles were worsening, canceled a contract in August.
As the recession deepens across the country, touching millions of individuals, it links people through countless cutbacks and layoffs. One job loss leads to another, much the way a wobbly domino can topple the whole row.
Minor financial decisions -- a penny pinched here, a dollar saved there -- build, rippling through a chain of strangers.
::
The loft in Pasadena's antiques district was funky, with Victorian chandeliers, exposed brick and a bathroom plastered with turquoise tiles. It seemed the perfect space for the video game start-up, WhiteMoon Dreams.
Founders Scott Campbell, 36, and Jay Koottarappallil, 32, moved out of their home offices and into the rented loft in August 2007. Soon after, a major video game publisher agreed to buy the shoot-'em-up game they were developing. The pair hired a dozen people and a handful of contractors. Everything seemed to be coming together.
Then the stock market started its free fall. Publishers grew skittish about spending money. The founders could see calamity coming, like someone anticipating the breakup of a relationship but powerless to do anything about it.
Last summer, a year after agreeing to the sale, they were crushed when the publisher, which they would not name for legal reasons, said it could no longer buy the game and brought in lawyers to unwind the deal.
But the founders didn't want to give up. They told employees they could stay -- if they didn't mind working for free. Six remained and have picked up a little work, but nothing yet that could revive the company's fortunes.
The stress is accumulating as WhiteMoon Dreams prepares to show off the game -- appropriately named Salvation -- at the Game Developers Conference this month. The founders hope to find a buyer for the project or a publisher that will hire the company to write something new.
Campbell and Koottarappallil feel the pressure of coming to work every day and not knowing whether it will be the last, of depending on family and friends and the unemployment office for money to survive, of watching yet another rent deadline or mortgage payment approach, of wondering who among them might decide to call it quits.
"Everything's on hold," Campbell said. "It's a waiting pattern to see how everything shakes out."
They set a Dec. 31 deadline to shut down the company but couldn't pull the trigger. They sit, work and wait. But some of their employees and contractors couldn't do the same.
Bill Maxwell, a writer who created plots and dialogue for the game, had a family to support and needed a salary. His initial contract ran out in June with an understanding he'd start another job for WhiteMoon Dreams in November.
But when the publisher backed out of the video game deal, the company couldn't afford to hire him again. Without any work on the horizon, Maxwell had to make some changes of his own.
Maxwell and his wife, Nikki, can rattle off a long list of things they've done without since he stopped working for WhiteMoon Dreams.
Their kids, ages 9, 6 and 3, are familiar with them too: No more sushi, lattes or Whole Foods groceries. No trips to Disneyland, indoor playgrounds or bowling alleys. No new books or DVDs. No fixing the tub in their second bathroom. No healthcare.
Bill, 41, spends hours sitting in the study of the family's one-story home in North Hills, searching Craigslist for jobs as leafy trees gently tap on the windows. A child's drawing taped to the bookshelf says, in shaky writing, "I am thankful for my dad."
Nikki, 39, was laid off from a job writing grants at a charter school last fall. When money grew tight, she surrendered to friends' counsel and picked up staples at a food bank in the Valley, although she was more used to donating and volunteering there. She choked up when, in addition to rice, beans and canned vegetables, she was given a sheet cake to share with her children.
Grief and anger have swamped the Maxwells at times, causing them to wonder whether things will ever change. How long can you look for a job without losing hope?
It's been tough, they say, being consigned to their cluttered home. They have spent days in sweat pants, stepping over crayons, guitars and piles of toys, and having to say no when their son asks for a Popsicle because there's just not enough money for treats.
"We had to make some hard choices," Nikki said, tucking a yoga mat into a wicker basket and glancing outside at a child's bike abandoned in the middle of the yard. "The bottom line is, I still have to feed my family."
That meant adding one more thing to the do-without list: their good friend and live-in nanny of six years, Dave Vasquez.
On a warm day in January, Vasquez peered in the mirror and saw a carless, cashless vagabond looking back at him. His eyes were bleary from nights of tossing and turning on couches, his skin sallow from eating TV dinners. His hair was scraggly and needed a cut.
Life changed dramatically after the Maxwells laid him off in August. Vasquez began a routine of couch surfing and job hunting, living off food stamps, taking buses around Northridge to look for work, hoping employers wouldn't mind that he had been arrested once years ago -- for stealing a loaf of bread.
Days meant heading to the employment office or scavenging for cigarette butts that, when combined, might contain enough tobacco for a smoke. Nights, he waited for darkness so he could retreat into the reprieve found only in sleep.
"You just do what you have to do to make sure tomorrow comes," Vasquez said.
Worst were the days spent in offices waiting for food stamps. He couldn't help thinking that he didn't belong, that he was different from the people there.
Each week, more people seemed to show up at the employment office looking for work, and the 36-year-old Vasquez wondered how he could compete. His scattered resume listed jobs at comic-book shops and in construction, as a cooking instructor and a record-store clerk.
So when Vasquez stared in the mirror on that January day, five months after being laid off, he knew he needed to look more professional. He glanced in his wallet and saw that he didn't have enough cash for a cut from one of the barbers he had frequented in the Valley.
Vasquez then picked up a 10-year-old pair of clippers, pulled off the plastic guards and shaved his head.
Proof of the sputtering economy has crept close to Rogelio Valdez's storefront on Reseda's Tampa Avenue. His neighbors' windows are covered with filthy "now leasing" signs. On the median, posters announce blowout sales at fabric stores and mattress warehouses.
Inside, Valdez's old-fashioned barbershop looks immune to the passage of time. From two framed paintings, Marilyn Monroe winks at the men sitting in red leather barber chairs so old they have built-in ashtrays. The red, white and blue barber pole rotating outside matches the tinfoil American flags that flutter above the door.
But not even a business offering $12 haircuts is spared the fallout when people such as Vasquez decide to scrimp. Things began to slow in January, Valdez said, and supply costs kept climbing: shampoo and scissors, hair spray and after-shave, trimmers and razor blades. So far this year, business is down 20%.
"The whole world's cutting back," he said.
Valdez, 64, now works longer hours -- seven days a week from 9 a.m. to 6:30 p.m., except Sundays, when he closes a little early to visit family in the Valley.
It's just bad timing, he said, that things started to slow seven months after he and his wife took over Medina's Barbershop from its previous owner, who had retired.
Valdez has been a barber for 40 years. Now he's working for himself, just as he had hoped to do as a young boy in Jalisco, Mexico. He decided then to enter the trade because he was told he could cut hair his whole life, even as an old man. He's glad that he's able to work extra hours to keep his doors open.
Not that it won't take some sacrifices, Valdez said as he brushed hair from a customer's shoulders. No more vacations to Las Vegas. No more unnecessary long car rides when the price of gasoline seems as unpredictable as the traffic patterns on the commute from his home in South-Central Los Angeles. No more dinners out at his favorite restaurant, the Great Wall, a few blocks away.
During the lunch rush, business at the Chinese restaurant is sluggish. Bowls of fried won tons line the counter, uneaten. Blue-and-white dishes are set atop empty tables as if waiting for a party to begin.
When people such as Valdez stopped coming in for meals, Great Wall owner Wilson Chien was determined not to fire any of his 11 staffers. He instead reduced each employee's hours by one day a week.
For Alice Lau, the $600-a-month pay cut means more years of pouring tea and delivering steaming plates of food.
"I'm getting older, I wanted to retire, but my investments went down a lot," she said, her short hair showing barely a trace of gray against her uniform of white tuxedo shirt and black bow tie.
Lau, 51, has seen hard times before. She emigrated from Hong Kong at 18 with a fifth-grade education and earned a living sewing in backrooms of tailor shops. She divorced and raised her three children alone. The Chinese restaurant she bought tumbled to the ground during the 1994 Northridge quake as if it were made of twigs.
Her kids are grown now. But one son is a student and her daughter works at a movie theater, so they still live at home, and Lau pays their insurance and cellphone bills. They try to help her with their salaries whenever they can.
"We're just hanging on," she said.
She's lucky though, Lau says as she shuffles between tables, placing a bowl of noodles here, a plate of fried pineapple balls there. She has good kids who "came up well" and a job she loves.
Still, Lau has had to make changes to make ends meet. She eats dumplings at home instead of dim sum in Alhambra. She blow-dries her hair rather than make weekly visits to Kim's Upper Cut, the salon next door. Her son does the yardwork at their West Hills home; Lau decided she could no longer afford the gardener who came weekly.
The gardener and the hairdresser surely pared their budgets too, adapting to the slowing economy. The ripple effect continues, although those affected may not know how they were swept up in it or where it might end.
L.A. Unified board OKs layoff notices to about 9,000 employees
The Los Angeles Board of Education approved issuing preliminary layoff notices to about 9,000 employees Tuesday despite a large demonstration by the teachers union and some board members' concerns over potential harm to educational quality.
In separate votes, the board approved sending letters to about 2,000 permanent elementary school teachers and about 3,500 probationary teachers informing them that they are in danger of losing their jobs.
The rest of the notices are going to non-teaching personnel, including counselors and administrators.
Before layoffs could occur in the nation's second-largest school system, the board would have to approve the terminations in June.
Board member Julie Korenstein voted against both measures, and Richard Vladovic voted against one and recused himself in the other. Marguerite Poindexter Lamotte also abstained from a vote.
Because of the state and national fiscal crises, the district is facing a nearly $700-million shortfall over the next 18 months.
District officials said they hope to avoid laying off all of the employees who will be given notice.
But Supt. Ramon C. Cortines cautioned that the district's deficit might grow. "If the revenue continues to be in the tank, we believe we will take another hit," he said.
Some board members said they were concerned that layoffs would harm the quality of student educations.
"You can't have a reduction in force of this magnitude and meet everyone's needs," Marlene Canter said.
Teachers union officials warned before the meeting that their members would perform an act of civil disobedience that could result in arrests. After protesting outside the board room, union President A.J. Duffy interrupted the meeting by speaking out of turn when it began.
"You know I'm not leaving the rostrum," he said as board President Monica Garcia admonished him.
"You are out of order," she said.
Union members, wearing red, sat in a semicircle around Duffy as the school board moved its meeting to a side room. Union members shouted "Shame on you!" and Korenstein, a strong union supporter, faced the crowd and put a hand over her heart before leaving the board room.
School district police ordered the group to disperse or face arrest. About 50 district employees who had been pre-screened by union officials remained behind, but police did not detain anyone.
The group remained in the board room, giving interviews to news media and discussing their concerns about larger class sizes and their students' education.
"This country we love was born out of civil disobedience," Duffy told the crowd.
The group left after nearly three hours to join another protest outside the building.
"We'll be back here to stop the cuts!" they shouted.
In separate votes, the board approved sending letters to about 2,000 permanent elementary school teachers and about 3,500 probationary teachers informing them that they are in danger of losing their jobs.
The rest of the notices are going to non-teaching personnel, including counselors and administrators.
Before layoffs could occur in the nation's second-largest school system, the board would have to approve the terminations in June.
Board member Julie Korenstein voted against both measures, and Richard Vladovic voted against one and recused himself in the other. Marguerite Poindexter Lamotte also abstained from a vote.
Because of the state and national fiscal crises, the district is facing a nearly $700-million shortfall over the next 18 months.
District officials said they hope to avoid laying off all of the employees who will be given notice.
But Supt. Ramon C. Cortines cautioned that the district's deficit might grow. "If the revenue continues to be in the tank, we believe we will take another hit," he said.
Some board members said they were concerned that layoffs would harm the quality of student educations.
"You can't have a reduction in force of this magnitude and meet everyone's needs," Marlene Canter said.
Teachers union officials warned before the meeting that their members would perform an act of civil disobedience that could result in arrests. After protesting outside the board room, union President A.J. Duffy interrupted the meeting by speaking out of turn when it began.
"You know I'm not leaving the rostrum," he said as board President Monica Garcia admonished him.
"You are out of order," she said.
Union members, wearing red, sat in a semicircle around Duffy as the school board moved its meeting to a side room. Union members shouted "Shame on you!" and Korenstein, a strong union supporter, faced the crowd and put a hand over her heart before leaving the board room.
School district police ordered the group to disperse or face arrest. About 50 district employees who had been pre-screened by union officials remained behind, but police did not detain anyone.
The group remained in the board room, giving interviews to news media and discussing their concerns about larger class sizes and their students' education.
"This country we love was born out of civil disobedience," Duffy told the crowd.
The group left after nearly three hours to join another protest outside the building.
"We'll be back here to stop the cuts!" they shouted.
Writers Guild to cut workers amid shortfall
Confronted with a growing budget deficit, the Writers Guild of America, West plans to cut about 20 positions by the end of the month.
The guild, which has about 185 employees, notified worker representatives last week that layoffs, which could begin this week, were needed to plug a budget hole of more than $2 million, said two people familiar with the matter. The union, which has 8,000 members, has annual operating expenses of about $25 million.
David Young, the union's executive director, recently told the guild's board that he was considering job cuts to close a budget shortfall, which guild officials have largely blamed on investment losses caused by the stock market decline and a sharp falloff in jobs and work for writers during the last year.
A guild representative declined to comment.
The layoffs can be directly tied to the tough times for Hollywood writers.
As scripted shows went dark during the 100-day writers strike last year, television networks beefed up production of reality programs -- which typically don't use union writers -- to fill the airwaves. That continued after the strike ended in February, creating fewer opportunities for writers. Some scripted shows didn't come back, while others returned with fewer episodes.
Writers also found it harder to command the same fees as they had in the past for work on network shows, which have been losing viewers to the Internet. More recently, the slowdown in work has been exacerbated by networks' ordering fewer pilots for new series.
All of which has meant less money rolling into the guild's coffers. The WGA's income depends on how much its members earn. Guild members, as part of their union dues, are required to contribute 1.5% of their earnings each quarter.
Also contributing to the budget shortfall, people familiar with the union's finances say, is the guild's ongoing campaign to organize writers in the reality TV sector who work behind the scenes crafting dialogue for programs. The guild spent about $400,000 on the drive last year, a person familiar with the situation said.
Some of the 20 positions could be eliminated through attrition, resulting in fewer layoffs. Affected employees will receive severance packages and a guarantee that they will be rehired if the union's finances improve.
The guild, which has about 185 employees, notified worker representatives last week that layoffs, which could begin this week, were needed to plug a budget hole of more than $2 million, said two people familiar with the matter. The union, which has 8,000 members, has annual operating expenses of about $25 million.
David Young, the union's executive director, recently told the guild's board that he was considering job cuts to close a budget shortfall, which guild officials have largely blamed on investment losses caused by the stock market decline and a sharp falloff in jobs and work for writers during the last year.
A guild representative declined to comment.
The layoffs can be directly tied to the tough times for Hollywood writers.
As scripted shows went dark during the 100-day writers strike last year, television networks beefed up production of reality programs -- which typically don't use union writers -- to fill the airwaves. That continued after the strike ended in February, creating fewer opportunities for writers. Some scripted shows didn't come back, while others returned with fewer episodes.
Writers also found it harder to command the same fees as they had in the past for work on network shows, which have been losing viewers to the Internet. More recently, the slowdown in work has been exacerbated by networks' ordering fewer pilots for new series.
All of which has meant less money rolling into the guild's coffers. The WGA's income depends on how much its members earn. Guild members, as part of their union dues, are required to contribute 1.5% of their earnings each quarter.
Also contributing to the budget shortfall, people familiar with the union's finances say, is the guild's ongoing campaign to organize writers in the reality TV sector who work behind the scenes crafting dialogue for programs. The guild spent about $400,000 on the drive last year, a person familiar with the situation said.
Some of the 20 positions could be eliminated through attrition, resulting in fewer layoffs. Affected employees will receive severance packages and a guarantee that they will be rehired if the union's finances improve.
SAP layoffs
SAP appears to be executing its layoff plan this week, which it announced back in January. In an open letter then to employees, SAP co-CEOs Henning Kagermann and Leo Apotheker announced that the workforce reduction would impact 3000 employees, or 5.8% of SAP's workforce.
Although a small number of SAP folks were let go in January, the remaining number appear to coming in waves, one of which is occuring this week. I first noticed an increasing number of hits to the Spectator from Google, under keywords "SAP layoffs" earlier this week. The only confirmation seems to be coming from Twitter.
At a minimum, based on Twitter status updates, layoffs appear to be taking place in Palo Alto yesterday and today. There also appear to be some layoffs that took place in Israel last week, and in Australia the week before.
Although a small number of SAP folks were let go in January, the remaining number appear to coming in waves, one of which is occuring this week. I first noticed an increasing number of hits to the Spectator from Google, under keywords "SAP layoffs" earlier this week. The only confirmation seems to be coming from Twitter.
At a minimum, based on Twitter status updates, layoffs appear to be taking place in Palo Alto yesterday and today. There also appear to be some layoffs that took place in Israel last week, and in Australia the week before.
Wednesday, April 1, 2009
20 Ways to Preventing Layoffs
1. Do the right thing all the time. This means making the tough decisions not to hire in the first place or replace less productive positions. Use attrition to make the necessary cuts. Make the tough decisions now rather than later. It just gets more complicated with time.
2. Hire well. It has been difficult in recent years to find good people. But sometimes it’s better to have a position vacant than to hire poorly…especially in management. One bad manager can take down ten’s to thousand’s with them.
3. Stay on a low fat diet. Exercise and keep your company fit by continuous improvement. Productivity is the intermediate measure of health and if it’s not always going up, you are becoming less competitive.
4. Use your resources wisely. I call this CEO or Cost-Effective Organization thinking. Manage your financial, time, people, space, knowledge, energy, and material resources well.
5. Read the tea leaves. Use both the pessimistic and optimistic views of the economy to shape your business decisions. Some of you companies are so large you have your own economists and we all have the Federal Reserve and others. Listen to them (with a grain of salt) and test the party line against reality and the predictions.
6. Partner. Partnerships and joint ventures can allow you to leverage your core resources and push the variability to others or reduce it.
7. Have everyone in the company on the team. Use methods such as the Profit Improvement Process to give everyone some level of influence over and responsibility for profits. It sure beats the adversarial approach.
8. Stop being selfish. Make decisions for the greater good of the corporation instead of the insular betterment of top management. Your people just may be more important than your bonus.
9. Beware the siren song of “across-the-board.” You may find that your company has a 10% disadvantage in the market but a 10% across-the-board cut is guaranteed to take out muscle as well as fat. Adjust your business unit by unit.
10. Listen to the pessimists. Those naysayers you are tempted to quash have something important to say. Listen but then take positive action on that negative view.
11. Prepare your contingency plans. You are much better off to have a plan to review if something bad happens than to have to invent something in the heat of a crisis.
12. Use overtime. Covering peaks in business with overtime allows you to scale back without layoffs when things slow down.
13. Manage your inventory. If you have missed the economic tea leaves, your next indicator may very well be your inventory or backlog. Anticipating a slow-down can mediate the impact.
14. Don’t expect to placate stock analysts with a mass layoff. There is unlikely to be a long-term positive impact on stock price just because you announce a cutback. It may be a cop out.
15. Invest in new products. New products are the only prevention for premature obsolescence. If you don’t develop internally, partner with those who do or buy new products. You must know where your products are in their lifecycles and plan accordingly.
16. Invest in new processes and technologies. Keeping up with the Joneses is vital. Just make sure you pick the right benchmarks to emulate. Watch out for fads! For at least some period of the 1990’s mass layoffs were a fad.
17. Watch your expansion. Expansion is fun but excitement can create a fog that hides the pitfalls of rapid growth. This is especially true when capital dries up in the middle of a growth spurt. Build revenues based on contribution margin and profitability not the top line.
18. Check your egos at the door. Be a team player. Use your drive for success in a positive way rather than just for self-aggrandizement. The failure to look out for others has taken many entrepreneurs and managers down along with their employees.
19. Stop shuffling the deck chairs on the Titanic. If a business unit isn’t achieving its goals, it is unlikely to get better if you just shuffle the staff around. Find the fundamental problems and fix them. Start with the top people. They set the tone.
20. If you have to make layoffs, do them the right way. Communicate, communicate, communicate, and get everyone involved. Have a clear and fair policy on what people are going to get. Take care of both the people being laid off and the survivors. Everyone will have pain and, hopefully, healing to experience. Help them. If you’ve run your company well to this point, they should understand that you have done everything you could to avoid this outcome. This will help you avoid future, bigger layoffs.
It’s not easy to be a manager or entrepreneur today. It never has been and it takes more than twenty tips to succeed. We always carry a responsibility for the people who work for us. This is our highest calling.
Sprint to lay off 8,000 by April
The reductions should reduce labor costs by $1.2 billion, the company said. About 850 of the layoffs are expected to be eliminated through a voluntary separation plan begun last year. The company employs a total of 56,000 workers.
The company posted a net loss of $326 million in the third quarter of 2008 and a net loss of nearly $1.2 billion for the first three quarters of 2008. Sprint Nextel, which plans to release its fourth-quarter numbers on Feb. 19, lost 3.5 million mobile-phone customers between the third quarter of 2007 and the third quarter of 2008.
CEO Dan Hesse said the reductions were necessary, even though the carrier has made improvements in customer service that have resulted in higher satisfaction ratings in customer surveys. Head-count reductions in customer-care functions will be less than those in groups that don't interact with customers, he added.
The carrier also said it will suspend the 401(k) matches for workers for 2009 and extend a freeze on annual salary increases started in 2008 through 2009. A tuition-reimbursement program was also suspended.
Sprint has about 51 million customers and is the third-largest wireless and wired carrier in the U.S.
Later, Sprint spokesman James Fisher confirmed earlier reports that Kathy Walker, Sprint's chief network officer, will leave Sprint at the end of March since her position was eliminated as part of today's layoff news. He said that Walker and Steve Elfman, the senior vice president of network operations, will be working on a management plan for networks and IT in coming weeks. "We are committed to maintaining the high quality of our networks," Fisher added.
Gartner Inc. analyst Phillip Redman said Sprint has been on a downward "spiral for years," adding that integrating Nextel was a major cause. But the biggest cause is that Sprint has struggled to find a strategy that differentiates it from competitors.
The "desire to be all things to all people has caused much of its problems as competitors have pulled ahead with stronger and broader offerings," Redman said. "Sprint needs to define its strength in the market, focus on those customers and improve its service. Unfortunately as it turns down call centers, lays off people and continually reorganizes, it [falls] further behind."
Problems with Sprint's financial numbers started years ago, and the poor global economy is "keeping Sprint down," despite improvements in the first half of 2008, said Jeffrey Kagan, an independent analyst. Hesse was hired more than a year ago, and a strong focus on customer service to prevent subscribers from defecting seemed to be working, he added.
The company posted a net loss of $326 million in the third quarter of 2008 and a net loss of nearly $1.2 billion for the first three quarters of 2008. Sprint Nextel, which plans to release its fourth-quarter numbers on Feb. 19, lost 3.5 million mobile-phone customers between the third quarter of 2007 and the third quarter of 2008.
CEO Dan Hesse said the reductions were necessary, even though the carrier has made improvements in customer service that have resulted in higher satisfaction ratings in customer surveys. Head-count reductions in customer-care functions will be less than those in groups that don't interact with customers, he added.
The carrier also said it will suspend the 401(k) matches for workers for 2009 and extend a freeze on annual salary increases started in 2008 through 2009. A tuition-reimbursement program was also suspended.
Sprint has about 51 million customers and is the third-largest wireless and wired carrier in the U.S.
Later, Sprint spokesman James Fisher confirmed earlier reports that Kathy Walker, Sprint's chief network officer, will leave Sprint at the end of March since her position was eliminated as part of today's layoff news. He said that Walker and Steve Elfman, the senior vice president of network operations, will be working on a management plan for networks and IT in coming weeks. "We are committed to maintaining the high quality of our networks," Fisher added.
Gartner Inc. analyst Phillip Redman said Sprint has been on a downward "spiral for years," adding that integrating Nextel was a major cause. But the biggest cause is that Sprint has struggled to find a strategy that differentiates it from competitors.
The "desire to be all things to all people has caused much of its problems as competitors have pulled ahead with stronger and broader offerings," Redman said. "Sprint needs to define its strength in the market, focus on those customers and improve its service. Unfortunately as it turns down call centers, lays off people and continually reorganizes, it [falls] further behind."
Problems with Sprint's financial numbers started years ago, and the poor global economy is "keeping Sprint down," despite improvements in the first half of 2008, said Jeffrey Kagan, an independent analyst. Hesse was hired more than a year ago, and a strong focus on customer service to prevent subscribers from defecting seemed to be working, he added.
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