The U.S. recession may just now be entering full swing, but storm clouds have been gathering for more than a year and many companies have already trimmed payrolls. Now, the goal for many companies is to prepare for an economic rebound by finding ways to keep the their skilled productive labor intact.

“More companies are exploring alternatives to layoffs,” John A. Challenger, chief executive of consulting firm Challenger, Gray & Christmas, told BusinessWeek. “If they can keep people on until the business turns around, the company would be in much better shape to ramp up quickly.”

Dell Inc. (DELL) employees, for instance, recently received a memo from Chief Executive Officer Michael Dell asking them to take some time off without pay. The company has already met its previously stated goal of cutting employee payrolls by 10%, but the memo said there would be more layoffs unless other cost-cutting measures, like unpaid leave, weren’t effective.

Other companies throughout Silicon Valley have joined Dell in elongating the holiday.
Hewlett-Packard Co. (HPQ), Cisco Systems Inc. (CSCO), Advanced Micro Devices Inc. (AMD), Texas Instruments Inc. (TXN), Adobe Systems Inc. (ADBE) and Computer Sciences Corp. (CSC) are among the industry heavyweights to be taking a break, with some closed from today until January 5.

Maria Guidice, owner of San Francisco-based Web design firm Hot Studio Inc., told the New York Times that when the dot-com bubble burst in 2000 many companies, including hers, immediately slashed payrolls but that tactic was painful and counterproductive.

“In 2000, it was like ‘cut the heads,’” she told The Times. But things are different this time around.

“Our No. 1 priority is to keep people employed and to do that we’re going to bank the money and keep it for when we need it,” Guidice added. “I know some people are super bummed, but they understand we’re trying to keep the workforce intact.”

California’s technology giants aren’t the only ones pursuing alternative cost-saving measures to save jobs, either. Across the country, in Towanda, PA, Global Tungsten & Powders is encouraging its 1,000 employees to take leave without pay in an effort to preserve manpower, The New York Times reported.

“We have a very skilled and competent workforce and the last thing we want to do is lose them when we’re assuming this economy is going to come back,” Craig Reider, the company’s director of human resources, told The Times in an interview.

The number of U.S. workers who normally work full-time but now clock fewer than 35 hours per week has soared 72% in the past year according to the Bureau of Labor and Statistics. The agency said the number of such employees climbed from 1.49 million in November 2007 to 2.57 million in November 2008.

Pella Corp., an Iowa-based manufacturer of windows, is instituting a four-day workweek for a third of its 3,900 employees, BusinessWeek reported.

“Our contention is, consumer confidence will rebound,” said Pella Senior Vice President Chris Simpson. “If there’s a [government] stimulus package of some kind, we think people are going to respond.”

A stimulus package being drummed up by the incoming Obama administration is rumored to cost roughly $800 billion, for instance.

Other companies, like Motorola Inc. (MOT), are cutting back salaries, but so far, pay cuts do not seem to be widespread. Labor Department figures indicate the average hourly pay for about 80% of the work force grew by 3.7% last month from November 2007.

John Challenger, of Challenger Gray & Christmas, says that the effort to save jobs is not just a fad, or a case of companies living in denial, but a shift in modern corporate ethos that is not only more humane, but more economical.

“People are measured and ‘metricked’ to a much greater degree,” he told The Times, “So companies know that when they’re cutting an already taut organization, they’re leaving big gaps in the workforce.”

Company Layoffs: More Companies Trim the Fat without Trimming the Workforce

• Oil prices extended their decline yesterday (Tuesday), falling $10 a barrel in a dramatic, two-day slide as the outlook for U.S., as well as global, energy demand grew weaker. Light, sweet crude for October delivery fell $4.56 to settle at $91.15 a barrel on the New York Mercantile Exchange, after earlier falling as low as $90.51 – the lowest level since Feb. 8.

• The Food and Drug Administration is closing U.S. borders to more than 30 generic drugs made by India’s Ranbaxy Laboratories Ltd. (OTC: RBXLY), citing poor quality in two of the company’s factories, The Associated Press reported. However, Ranbaxy can continue selling medicines made at any of its other factories.

• Best Buy Co. (BBY) said yesterday (Tuesday) that its second-quarter profit fell 19%, to $202 million, despite a 12% jump in revenue. Same-store sales jumped 4.2% and total revenue came in at $9.8 billion. A sluggish U.S. economy will continue to challenge the retail giant the second half of the year.

• Bristol-Myers Squibb Co. (BMY) said yesterday (Tuesday) that it might drop its $4.5 billion offer for the 83% of ImClone Systems Inc. (IMCL) it doesn’t already own. “There are situations in which we are willing, and we’ve disclosed that, we’re willing to walk away,” Jean-Marc Huet, Bristol’s Chief Financial Officer, said response to a question at a pharmaceutical investors conference, The Associated Press reported.

• Citigroup Inc. (C) Chief Executive Officer Vikram Pandit sent an e-mail to all 300,000 Citi employees reassuring them of the bank’s stability during this troubled time in the financial sector. “We can all be proud to represent Citi, an extraordinary institution, which has and will continue to play a critical role in global financial markets,” the e-mail read, BusinessWeek reported.

• General Motors Corp. (GM) officially unveiled its plug-in hybrid car the Volt yesterday (Tuesday) as part of the automaker’s 100th anniversary celebration. GM hopes the Volt will play a key role as it shifts to a more fuel-efficient line-up away from its previous reputation of large trucks and high horsepower vehicles, MarketWatch reported.

• Adobe Systems Inc. (ADBE) managed to beat Wall Street analyst expectations despite a slip in fiscal third-quarter profit. Net income for the San Jose, Calif.-based software maker for the period ended Aug. 29 dropped to $191.6 million, or 35 cents a share, compared with $205.2 million, or 34 cents a share, in the same period a year prior, MarketWatch reported. “We’re particularly impressed with Adobe’s profitability levels, which were higher than expected,” said Edward Jones analyst Andy Miedler.

• Constellation Energy Group Inc. (CEG) shares plunged $17.23, a decline of over 35%, to close at $30.76 yesterday (Tuesday) on investor concerns that banks would pull the utility’s credit lines, Reuters reported. The cost to insure Constellation’s long-term debt soared 60%, a record high, according to Markit Intraday.

Source: Global Investing Roundups Wednesday, September 17th, 2008