THE TIMES 100 : The Best Performing Companies in California : THE HUMAN FACTOR : Top Employers Pull Back as Economy Sours
The shrinking payrolls and conservative hiring plans of California-based firms on The Times’ Top 100 Employers list are testaments to the tough economic times that have hit the state and the nation.
The recession, a weak real estate market and Pentagon budget tightening made it nearly impossible for any of the state’s major industries to escape layoffs and cutbacks in 1990.
“My sense is that the two sectors that were hit the hardest were construction and aerospace; they definitely stand out,” said David Hensley, who watches the California economy at the UCLA Business Forecasting Project. But, he added, “it’s hard to find a sector that has not been dinged.”
The damage was widespread, indeed. The number of people employed in California by the end of 1990--about 12.8 million--grew only 1% from the previous year, according to the state Employment Development Department. Meanwhile, the state unemployment rate began climbing dramatically during the late summer and reached 7.1% in December. More than a million Californians were unemployed by year-end.
The loss of jobs was especially painful in construction and aerospace, which had grown rapidly during the 1980s and accounted for a number of high-paying jobs. Construction employment in December, 1990, fell 4.5% from the previous year, while employment in aircraft manufacturing fell 7.3%, according to state figures.
In light of such statistics, it’s not surprising to see that a growing number of California-based firms took a conservative stance on hiring, according to The Times 100 survey.
Asked about plans, 27.2% of all the firms surveyed by MZ Group of San Francisco said they would increase staff rolls, in contrast to the 44% last year who planned to do so. Meanwhile, companies that said they would maintain current employment levels rose to 62.4% from last year’s 50%; those expecting to cut staff rose to 10.4% from 6%.
The outlook was particularly bleak in some sectors. Only 6.7% of aerospace and defense firms (versus 20% last year) said they would increase staff, while 33.3% anticipated cutbacks (versus 20% last year). Among savings and loans, which continued to be battered by bad real estate loans and other investments, 34.6% of those surveyed said they would reduce hiring while only 3.8% planned to increase personnel. Last year, in contrast, 22.7% planned cutbacks, while almost one-third of the S&Ls; surveyed--31.8%--thought they would increase staff.
In consumer products, only 20% of firms surveyed (versus 39.3% last year) planned to increase personnel, while 17.5% (versus 7.1% last year) expect to reduce staff rolls. In retail, employers were not as optimistic as last year: 25% of firms (versus 54.5% last year) planned to increase staff, while 14.3% expected to make cuts (versus none last year).
The Top 100 Employers list also mirrors layoffs and corporate streamlining in the face of tough economic times. For example, the combined number of positions at the three largest aerospace firms on the list--Rockwell International, Lockheed and Northrop--fell by more than 19,000.
At San Francisco-based Pacific Telesis, the parent company of Pacific Telephone, a five-year plan to cut jobs through attrition reduced the number of positions by nearly 3,000 to about 65,800 during 1990.
“We have a plan to reduce 11,000 jobs over five years,” said Pacific Bell spokeswoman Kathleen Flynn Jacobs. “We are right about on schedule.”
Corporate restructurings produced some of the declines. Los Angeles-based Teledyne, for example, spun off its insurance operations to shareholders to focus on manufacturing and developing industrial metals and products. As a result, its employment fell by nearly 25% to 33,200.
Despite the relentless waves of layoffs in some industries, others managed to buck the dreary downward trends in employment.
Health-care companies on The Top 100 Employers list posted some of the most dramatic employment gains. FHP International, which owns and operates hospitals and clinics, added 1,400 positions during 1990 as it completed four new medical facilities, three in California. The Fountain Valley-based firm moved up to No. 67 from No. 79 on the list.
“FHP has grown about 20% a year since 1985, and we are keeping up with that growth,” said spokeswoman Ria Marie Carlson.
Some high-tech companies have also managed to weather the hard times.
Employment at Sun Microsystems, the leading maker of computer workstations for scientists and engineers, increased to 12,390, up nearly 20%. Microsystems was ranked at No. 48 on the list of Top 100 Employers, up from No. 58 the year before. These figures may change.
Tandem Computers, the Cupertino-based maker of mini- and mainframe computers, added 1,000 positions, mostly in marketing, research and customer service departments. Tandem, with nearly 11,000 employees, moved up nine notches to No. 54 on the Top 100 Employers list.
Signs that the state’s economic slump may have hit bottom could mean improved employment prospects. The dramatic decline of existing home sales is expected to ease this year, according to the California Assn. of Realtors. After falling 17% last year, existing home sales are expected to decline 10% this year before posting gains in 1992.
But some sectors may never fully recover to the robust levels they once enjoyed. In Los Angeles County, the aerospace industry--the area’s largest source of manufacturing employment--lost 12,000 jobs during 1990 and is expected to continue shrinking through the middle of the decade, economists say. Furthermore, the loss of aerospace jobs will reverberate throughout the state’s economy, reducing retail spending and eroding the tax base.
“It’s definitely going through the wringer,” said Jack Kyser, chief economist at the Los Angeles Area Chamber of Commerce. “As far as our aerospace industry locally, it’s going to be tough times for the next couple of years.”
EMPLOYMENT OUTLOOK
Survey respondents’ plans to increase, maintain or reduce staff.
Total Total Total Total Industry increasing neutral reducing responding Aerospace & Defense 1 9 5 15 Agriculture 0 1 0 1 Banking 2 15 3 20 Basic Materials 2 10 1 13 Biotechnology 1 0 0 1 Computer Products 33 45 5 83 Computer Services 2 3 0 5 Consumer Products 8 25 7 40 Drugs & Pharmaceuticals 6 5 0 11 Electronics 29 50 4 83 Energy 1 7 0 8 Entertainment & Leisure 4 25 3 32 Financial Services 10 21 3 34 Health Services 6 10 2 18 Industrial 8 30 7 45 Real Estate 0 8 2 10 Retail 7 17 4 28 Savings & Loans 1 16 9 26 Services 16 23 0 39 Telecommunications 3 2 0 5 Utilities 2 6 0 8 Wholesale 6 15 2 23 Total 149 342 57 548
Percent Percent Percent Industry increasing neutral reducing Aerospace & Defense 6.7 60.0 33.3 Agriculture 0.0 100.0 0.0 Banking 10.0 75.0 15.0 Basic Materials 15.4 76.9 7.7 Biotechnology 100.0 0.0 0.0 Computer Products 39.8 54.2 6.0 Computer Services 40.0 60.0 0.0 Consumer Products 20.0 62.5 17.5 Drugs & Pharmaceuticals 54.5 45.5 0.0 Electronics 34.9 60.2 4.8 Energy 12.5 87.5 0.0 Entertainment & Leisure 12.5 78.1 9.4 Financial Services 29.4 61.8 8.8 Health Services 33.3 55.6 11.1 Industrial 17.8 66.7 15.6 Real Estate 0.0 80.0 20.0 Retail 25.0 60.7 14.3 Savings & Loans 3.8 61.5 34.6 Services 41.0 59.0 0.0 Telecommunications 60.0 40.0 0.0 Utilities 25.0 75.0 0.0 Wholesale 26.1 65.2 8.7 Total 27.2 62.4 10.4
