Google Inc.’s announcement earlier this week that it planned to slash thousands of workers from its recently acquired cell phone business was eerily reminiscent of the mass layoffs that displaced scores of Ohio workers at the height of the last recession.
More than three years into the recovery, however, mass layoff announcements have become more of an anomaly than standard business practice, suggesting employers are no longer downsizing rapidly despite sluggish economic growth and unemployment of 7.2 percent in Ohio and 8.3 percent nationally.
“During the recession, there were a lot of companies whose revenues were just falling off the table, and they went through massive changes,” said John Challenger, chief executive of Chicago-based workforce consultancy, Challenger, Gray & Christmas. “A lot of that has been completed now, and you’re likely to see fewer bouts of big layoffs at big companies.”
In Ohio, where a dramatic slowdown in manufacturing during the recession led factories to shed hundreds of workers at a time, mass layoff announcements by employers fell to 668 last year from a peak of 1,205 in 2009, government statistics show. The drop in mass layoffs — which affect at least 50 workers at one company — cut the total number of worker separations by more than half over the same period to 39,058 from 114,879, based on figures from the Ohio Department of Job and Family Services.
The last major mass layoffs in the region in 2009 included 644 employees at NCR Corp. and 200 employees at Iams in Dayton, 299 workers at SMART Paper in Hamilton and 186 workers at Auto Truck Transport Corp. in Springfield, though those numbers were dwarf by the 2,621 workers laid off by ABX Air in Wilmington, according to Workers Adjustment and Retraining Notification Act notices filed with the state.
Nationwide, the 4,512 mass layoffs announced by private, non-farm employers in the second-quarter of this year was the lowest second-quarter total since 2007, when 3,741 mass layoffs were announced in the the three-month period that ended in June, the U.S. Bureau of Labor Statistics reported.
Still, workforce reductions remain a primary tool for many companies struggling to keep costs under control as the economic recovery inches along in fits and starts.
Shrinking staff to match work
U.S. employers announced 283,091 total layoffs through the first half of the year, up 15 percent from the first six months of 2011, according to Challenger’s research.
“The economy has remained weak and not very stable, and we don’t know what tomorrow is going to bring,’’ said Dave Dysinger of Dysinger Inc., a precision machine business in Dayton. “In a wildly fluctuating market like that you have no recourse but to shrink your staff to match the work that is available to you.’’
Dysinger said he is not planning any layoffs, but small to medium-sized firms such as his are often the most vulnerable to the intermittent slowdowns that have plagued business cycles since the recovery began in June 2009, Challenger said.
“The small- to medium-sized companies that do a lot of the hiring are still facing a lot of change and turnover,” he said. “They’re not looking at big layoffs, but they’re constantly turning out the people who aren’t doing as well. You see a lot of those companies take the bottom 10 percent of their performers and move them out.”
But employers are generally reluctant to cut too many workers because of the time and training it takes to replace them, especially skilled laborers who have become increasingly hard to find.
“The real problem for a company like ours is that it takes about 10 years from the beginning to develop a top-notched machinist,’’ Dysinger said. “So we end up constantly chasing people to develop. And just as we’re getting them developed, we go into another downturn in the economic cycle.”
That can force an employer to make tough choices about who stays and who goes.
“Even in a down economy, you still need that balance of skill levels to be successful,” Dysinger said. “You have to have the right people matched up to the right work.”
Employers striving to maintain that balance have contributed to the general slowdown in layoffs and a sharp decline in the number of people seeking unemployment aid as a result.
Nationwide, initial claims for unemployment benefits — the most widely tracked gauge of layoff activity — fell unexpectedly in the first week of August by 6,000 to a seasonally adjusted 361,000, the U.S. Department of Labor reported last week.
In Ohio, initial claims for the first week in August were down were down 13 percent from from the previous week to 10,089.
While the drop in new applications offers hopeful signs that the labor market is at least beginning to stabilize, worries about pending government spending cuts and higher taxes coupled with fears about Europe’s on-going debt crisis, among other economic concerns, promise to keep unemployment elevated for the foreseeable future, said James Brock, a Miami University economics professor.
“Employers will remain reluctant to add workers until there is more clarity about where the economy is headed,” Brock said.
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