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AT&T Cutting Payroll by Up to 15,000 Jobs : Telecommunications: Company says work force reductions are made necessary by technological advances.

February 11, 1994|JONATHAN WEBER | TIMES STAFF WRITER

NEW YORK — American Telephone & Telegraph Co. said Thursday that it will cut 14,000 to 15,000 jobs in its telephone services unit over the next two years, a move the company says will save $900 million annually and enable it to stay competitive in the cutthroat long-distance business.

The job reductions are the latest in a seemingly endless series of layoffs by blue-chip corporations, whose executives say they must reduce bureaucracy and cut costs to compete in the 1990s. Indeed, AT&T has been aggressively slashing its payroll for years, ever since the breakup of the Bell System in 1984.

The cutbacks announced Thursday will affect about 15% of the long-distance division's 96,000 employees, falling heavily on middle managers. AT&T, which employs 306,000 people overall, said 8,000 managers will lose their jobs; the remainder of the cuts will hit unionized workers in clerical and operations positions.

About a third of the reductions will be in New Jersey, where AT&T is headquartered, with the rest spread around the country. Eight regional sales and service centers, including one in Pleasanton, Calif., will be shut down.

AT&T said customer service will not be affected. But the Communications Workers of America, the union that represents most of the non-management employees, disagreed.

"Here's yet another example of a healthy company playing to Wall Street and looking for a quick cost-cutting fix instead of growing the business," CWA Vice President James Irvine said in a statement. "Most of the people AT&T wants to get rid of are the operator and service representatives who deal directly with the customers. . . . Servicing the customers is AT&T's strength and its future."

AT&T and the CWA agreed in 1992 to engage in a program known as the Workplace of the Future, designed to foster cooperation between the union and management. Irvine said Thursday's action "casts a long shadow" over that effort.

Bill Ketchum, vice president of labor relations at AT&T, said he hopes that will not be the case, though he acknowledged that "it certainly creates a strain." The union, he said, has been aware of an upcoming layoff, though "the magnitude of it may have been a bit of a shock."

Ketchum said new technologies and processes will enable the company to do the same amount of work with fewer employees.

Richard Nespola, president of Management Network Group, a Leawood, Kan.-based telecommunications consulting company, agreed with that assessment.

"AT&T has over the last several years put a lot of money into developing new systems and new software applications and computer tools that make employees more productive," said Nespola, whose firm counts all the major long-distance carriers among its clients. "You should not see any diminishment in their service."

Still, AT&T is taking on a big task in trying to fight its competitive battles against MCI and Sprint with a smaller work force. AT&T's share of the long-distance market has been declining, if slowly, and it has suffered from recent blunders in consumer marketing.

Yet it remains by far the largest long-distance carrier and produces substantial profit--$982 million in the fourth quarter of 1993. Peter Bernstein, senior vice president of Probe Research of Cedar Knolls, N.J., said the problem is not that the company isn't making money, but rather that "it's not making what (it thinks) it should."

Competition, he said, has forced AT&T to cut prices, "so the only way to maintain profit is to cut people."

When the Bell System was broken up in 1984, AT&T had 373,000 employees; most observers agreed that its monopoly tradition had left the firm bloated. Currently, the company has 309,000 workers, despite adding 69,000 employees through acquisitions over the last decade.

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