More Big Firms Cut Jobs Despite Economy’s Rise : Employment: Number of layoffs generally shrinking, study finds. Companies are also adding jobs in other divisions.

More big companies cut jobs over the past year, despite the improved economy, but the cutbacks themselves generally grew smaller, a new survey shows.

In a hopeful sign for workers, the survey also found that many companies cutting positions in one part of their businesses are offsetting the pain by adding jobs elsewhere.

Still, amid new indications that “downsizing” is paying off in improved profits for many employers, even more firms plan to eliminate positions in the coming year.

The American Management Assn. survey, which polled 713 major U.S. companies with an estimated 2.6 million workers, showed that 47.3% of the firms eliminated positions from mid-1993 through mid-1994. That was up from 46.6% in the previous 12 months.

Among the 82 California-based employers included in the survey, the increase was bigger, with 57.3% cutting jobs in the most recent period, compared to 47.3% the year before.

The reasons most often cited for the cutbacks involved anticipated or ongoing business downturns. But for the first time in five years, fewer than half of the employers gave that as their rationale.

Instead, employers increasingly are making sharply focused layoffs during good times or bad to fine-tune their operations, said Eric Greenberg, the AMA’s research director. He said these job eliminations reflect a trend in corporate America toward slashing payrolls down to “absolute, irreducible cores of permanent employees.”

Meanwhile, 25.8% of employers said they expected to cut jobs in the coming year. Since companies normally underestimate layoffs, researchers figure that about twice as many firms actually will make cutbacks. By comparison, at the same time last year, 21.6% of the companies anticipated layoffs.

While continuing cutbacks have made American workers increasingly insecure about their jobs, there were signs that things are getting a little better for employees. For instance, the combination of smaller layoffs and increased hiring meant that the net reduction in employment over the last year was 5.2% among the companies surveyed, versus 8.4% the previous year.

Employers, for their part, could take heart in a finding that 50.6% of the companies that have cut staff since 1989 have netted higher profits, a somewhat brighter finding than discovered in other surveys.

For instance, a study released last October by the Wyatt Co. consulting firm found that only 46% of the companies it surveyed boosted their profits by cutting employment.

Both the AMA study and the Wyatt survey found that cutbacks work best when they are part of continuing programs, rather than one-time efforts, to reduce costs and boost productivity.

The AMA survey also reflected the hammering California has taken from big layoffs by major companies. Among the California-based companies in the survey with more than 10,000 employees, staffs were down an average of 13.4% from their level of January, 1989.

By comparison, work forces at the biggest companies nationwide were down only 0.3% over the same period. “No wonder you guys are having so many problems,” Greenberg said.

Triggers for Downsizing

Actual business downturns or anticipated slowdowns were the main reason employers cut staff from mid-1993 to mid-1994 but, increasingly, other factors also played a role.

Reasons National California Business downturn (actual or anticipated) 48.7% 55.3% Increased staff productivity 41.5% 38.3% Transfer of work to other locations 20.5% 27.7% Merger or acquisition 13.4% 19.2% Automation or other new technology 13.7% 17.0% Plant obsolescence 3.0% 6.4%

Totals exceed 100% due to multiple answers

Source: American Management Assn.