THE TIMES 100 : The Best Performing Companies in California : THE HUMAN FACTOR : One Business Term Lingers: Cut, Cut, Cut
Spurred by the weak economy, California’s biggest businesses slashed their work forces with a vengeance last year. And don’t count on any good news soon: forecasters say employment at the state’s corporate giants will keep falling in 1992.
By some accounts, the best hope for job hunters is likely to be at small and medium-sized companies, which have been creating most of the nation’s new jobs for years. Still, the continuing economic ills afflicting California’s leading companies will also hamper the smaller outfits--and dampen their hiring plans.
California, state figures show, has lost a staggering 570,000 jobs since May, 1990. Even if America’s glacial economic recovery gains momentum this year, hiring by California employers will be badly hurt by, among many other things, continuing cutbacks in the state’s huge defense industry.
One economist, Joseph A. Wahed of Wells Fargo Bank in San Francisco, estimates that the state will lose another 100,000 jobs this year. He calls this the longest and most severe recession in California since World War II.
“If you’re going to stay alive in business world today and make money, you have to take extraordinary measures. You have to merge, go out of business or you can cut payrolls,” Wahed said, adding: “And that’s what has happened.”
Labor economist Audrey Freedman, president of the New York consulting firm Manpower Plus, said the state’s employers also will feel the effects of Japan’s emerging economic problems. “California, in a way, never admitted to itself how much it benefited from Japanese investment . . . the Japanese withdrawal of assets will affect California more seriously than any other state.”
The research firm MZ Group, in a survey of California employers with annual revenue exceeding $10 million, found that 60.2% of the 452 respondents plan to keep their staffs roughly the same size this year. Another 27.7% expect to add workers while 12.2% anticipate cutting back.
Yet that hint of a modest gain in employment may well be overly optimistic. A year ago MZ Group’s survey found that the number of companies planning to expand exceeded those expecting to contract by a 27.2%-to-10.4% margin--only to be followed by a blizzard of layoffs at the state’s corporate giants.
In 1991, the downsizing trend struck the vast majority of the publicly held companies making up The Times’ top 100 employers list compiled by MZ. Safeway Inc., the supermarket company, held its No. 1 ranking on the employment list despite losing more than 4,400 jobs companywide since MZ’s 1990 rankings.
Computer maker Hewlett-Packard crept from third to second place on the list even though it eliminated 3,000 jobs. And defense giant Rockwell International slipped from second to third by losing nearly 15,000.
Rounding out the top five were the aerospace industry’s Lockheed Corp., which stayed in fourth place despite losing 700 jobs, and Pacific Telesis Group, parent of Pacific Bell, which remained the fifth-biggest employer despite the loss of almost 3,600 jobs.
Meanwhile, the cutoff for earning a spot on the list dropped slightly. Logicon Inc., with 3,320 employees, ranked 100th this year, while a year ago MAI Systems Corp. held the same spot with employment totaling 3,400.
Even though these employment figures partly reflect cutbacks in other states where these companies have operations, California was hit particularly hard. For instance, Safeway actually showed a slight gain in employment outside of California, but that gain was more than offset by the elimination of nearly 4,800 jobs in the Golden State, MZ found.
One of the most dramatic changes among the top 10 employers involved Occidental Petroleum, which has been shedding assets. Ranked No. 7 on the employers’ list a year ago, Occidental came in 28th this year. Its employment fell to 24,700 from 55,000. (In that case, though, Californians didn’t feel as much pain: Occidental employs only 800 Californians, down just 130 from a year earlier.)
Big job losses also came in the slumping banking industry. First Interstate shed more than 5,000 jobs since MZ’s 1990 survey. Wells Fargo and Security Pacific--acquired last week by BankAmerica Corp.--cut their work forces too.
The biggest employer to fall off the Top 100 Employers list was Carter Hawley Hale Stores, parent of the Broadway department store chain. It’s still a big employer, but was dropped from MZ’s ranking because of its Chapter 11 bankruptcy filing in February, 1991. A year ago, Carter Hawley was the 26th-biggest employer, with 29,000 people, including 26,000 in California.
Some of the others dropped from the list were Intermark, a real estate and retailing firm that has sold assets; HomeFed Corp., a financially strapped savings and loan company; and National Education Corp., one of the nation’s biggest technical training companies whose full-time work force was trimmed slightly. Also, Collins Foods and Sizzler Restaurants were both on the 1990 list, but as a result of their merger in 1991, only the Sizzler name remains.
On a brighter note, a number of firms reported rising employment, either because of expansions or acquisitions. The Gap, which emerged from the recession as one of the nation’s most successful retailers, reported employment of 32,000, up 9,000 from roughly a year earlier. The company declined to indicate how many of its employees are in California.
Also adding 9,000 employees was Dole Food Co., which climbed to No. 6 on the Top 100 list, up from 10th place a year ago.
Some of the new arrivals on the top 100 employers list are ICN Pharmaceuticals, SPI Pharmaceuticals, Raycomm Transworld, Charles Schwab Corp. and Clothestime Inc.
Employment Outlook
Survey respondents’ plans to increase, maintain or reduce staff.
Total Total Total Total Industry Increasing Neutral Reducing Responding Drugs & Pharmaceuticals 6 3 0 9 Aerospace & Defense 1 5 6 12 Agriculture 0 2 0 2 Banking 3 14 2 19 Basic Materials 0 9 0 9 Biotechnology 2 0 0 2 Computer Products 21 40 5 66 Computer Services 1 2 0 3 Consumer Products 8 18 5 31 Drugs & Pharmaceuticals 6 3 0 9 Electronics 27 49 8 84 Energy 1 3 2 6 Entertainment & Leisure 3 19 3 25 Financial Services 7 15 2 24 Health Services 7 8 2 17 Industrial 6 23 7 36 Real Estate 1 6 1 8 Retail 5 14 2 21 Savings & Loans 3 11 6 20 Services 13 17 1 31 Telecommunications 1 0 1 2 Utilities 3 5 1 9 Wholesale 6 9 1 16 TOTALS 125 272 55 452
Percent Percent Percent Industry Increasing Neutral Reducing Drugs & Pharmaceuticals 66.7 33.3 0.0 Aerospace & Defense 8.3 41.7 50.0 Agriculture 0.0 100.0 0.0 Banking 15.8 73.7 10.5 Basic Materials 0.0 100.0 0.0 Biotechnology 100.0 0.0 0.0 Computer Products 31.8 60.6 7.6 Computer Services 33.3 66.7 0.0 Consumer Products 25.8 58.1 16.1 Drugs & Pharmaceuticals 66.7 33.3 0.0 Electronics 32.1 58.3 9.5 Energy 16.7 50.0 33.3 Entertainment & Leisure 12.0 76.0 12.0 Financial Services 29.2 62.5 8.3 Health Services 41.2 47.1 11.8 Industrial 16.7 63.9 19.4 Real Estate 12.5 75.0 12.5 Retail 23.8 66.7 9.5 Savings & Loans 15.0 55.0 30.0 Services 41.9 54.8 3.2 Telecommunications 50.0 0.0 50.0 Utilities 33.3 55.6 11.1 Wholesale 37.5 56.3 6.3 TOTALS 27.7 60.2 12.2
Source: MZ Group
