In tandem cost-cutting actions Friday, Smith International Inc. laid off 75 managers and salaried workers from its Irvine tool division and completed the moving of its corporate headquarters from luxurious offices to smaller quarters down the street in Newport Beach.
Smith has announced new layoffs in each month so far this year, bringing to about 800 the number of workers handed pink slips since Jan. 1. That represents nearly one-tenth of the company's worldwide work force of 8,000. Friday's layoffs had been confirmed by the company one week ago, but at the time, Smith officials would not disclose the number of workers.
Smith officials said the move and the layoffs have saved the company "a substantial amount," but he would not elaborate. The move, said Paul Russell, vice president of corporate communications, "won't get our stockholders 10 cents more on a share, but that doesn't mean we shouldn't do it."
Executives say that all the recent cuts at Smith are a result of the continuing decline of worldwide oil-drilling activities. Analyst Jeff Freedman, of New York-based Donaldson, Lufkin & Jenrette, said, "In hindsight, these measures probably should have been taken earlier, but the company honestly thought that business was going to improve."
Big Loss in '84
Earlier this week, Smith reported it lost $65.8 million in fiscal 1984, ended Dec. 31. The figures included $85 million in expenses related to Smith's futile battle to take over Gearhart Industries.
Analysts said the oil-drilling picture has worsened in 1985, and Smith officials would not rule out further layoffs during the year. Russell said, "We certainly hope there won't be anymore layoffs, but we're not making any promises. No company can."
Russell said that few of the laid-off workers--who got the bad news Thursday and Friday--were surprised.
"Our employees are all aware that the fortunes of Smith are tied to the drilling industry," he said. Most of those let go will receive a three-month extension of medical benefits and assistance in finding new jobs, he said. Russell said Orange County's strong economy has eased placement of some Smith workers laid off earlier this year.
In January, the Smith Tool layoff of 700 hourly workers was followed in late February by the dismissal of 31 office workers from Smith's corporate headquarters. The remaining 60 corporate workers were busy unpacking boxes at Smith's new offices Friday morning. Many of them were dressed in blue jeans and T-shirts for the move, and even Smith's chairman, Jerry W. Neely, wore casual slacks and no tie.
Swap of Office Space
Smith is literally swapping office space--and office furniture--with its landlord, the Koll Co. In the move, arranged weeks ago by Smith and Koll executives, Koll more than doubled its office space while Smith saw its own space cut in half.
Following the February layoff, Smith found itself with "too much building for two few people," Russell said. At the same time, Koll was searching for more office space, since the size of its corporate staff has nearly doubled in the past year.