36% of Firms Cut Staff in Last Year, Survey Says

A smaller percentage of U.S. companies trimmed their work forces in the past 12 months, compared to a year ago, but the cuts were deeper, according to a study released Monday.

The American Management Assn.’s annual “downsizing and outplacement” report said 36% of companies scaled back nationwide, down slightly from the previous annual survey, in which 39% of companies cut jobs. Some 55% of those responding to the survey attributed the moves to actual or predicted business losses--28% higher than the proportion of companies that used the same primary reason a year ago, according to Eric Greenberg, editor of the group’s research reports.

However, the average number of jobs trimmed rose sharply.

In the new survey, which sampled the experiences of 1,241 companies between July, 1989, and June, 1990, staffs were reduced an average of nearly 11%. The average downsizing eliminated 195 jobs, a 20% increase over the previous year’s survey in which the average downsizing eliminated 162 jobs.

More than half (55%) of those who lost their jobs were hourly workers. Unionized workers, who make wages about 20% higher than non-union workers, were disproportionately affected. While union workers make up only 15% of the American work force, 53% of the jobs eliminated belonged to union members.

Fifteen percent of the companies surveyed predicted that they will make more cuts in the next 12 months, but previous experience indicates that twice that many will actually cut jobs. More ominous for workers is the fact that the predictions were made before the Persian Gulf crisis, which has triggered even stronger recessionary fears.

Of the 119 companies in California that were surveyed, 37% cut employment during the past year.

Responses from companies surveyed in California were somewhat more optimistic than the nation as a whole. About 41% of companies that cut staff did so because of a business downturn, compared to the 55% national figure.

Three-quarters of those California businesses that downsized also froze hiring. Only about 63% of firms that downsized nationwide added a hiring freeze.

Other major reasons given by survey respondents for staff cuts were “improved staff utilization” (23%), merger and acquisition (9%) and transfer of production or work to another location (7.6%).

New England was the region hardest hit by cuts. Forty-nine percent of firms reported cuts.

Businesses most likely to downsize were manufacturers. Forty-four percent of them reported downsizing, compared to 33% of service firms.

Half of the firms employing 10,000 or more employees cut staff, compared to 33% of those employing fewer than 500.