Newspaper article The Christian Science Monitor

Telecom Mergers as a Window on Job Market ; While Thousands of Layoffs Are Expected, Other Openings May Mean an Easier Rebound for Workers Than in 2001

Newspaper article The Christian Science Monitor

Telecom Mergers as a Window on Job Market ; While Thousands of Layoffs Are Expected, Other Openings May Mean an Easier Rebound for Workers Than in 2001

Article excerpt

Four years ago, the telecom industry had the dubious distinction of leading the nation in layoffs. Now, it looks as if the industry, in the midst of a major consolidation, could be one of the top job cutters again.

But this time, employment specialists don't think the job prospects for all those supervisors, engineers, accountants, and personnel specialists will be as bleak. Unlike 2001, those out of work won't be fighting for jobs with unemployed dotcomers. The layoffs also come at a time when the economy is growing, not in recession. And online bulletin boards report they have job postings for people in the business.

In fact, the experience of laid-off telecomers could be a sign of the resurgence of the job market - something predicted for 2005.

"It is a much more sanguine time," says John Challenger of Challenger, Gray & Christmas, a Chicago outplacement firm. "Hopefully, people coming out of telecom with basic business skills will find them transferable from industry to industry."

Initially, a considerable number of resumes will be circulating from telecom employees. SBC Communications, which is acquiring AT&T, says it expects to cut about 13,000 jobs on top of another 12,000 that will be eliminated before the merger is finalized. The Verizon- MCI marriage could put 7,000 people on the unemployment line. And the Sprint-Nextel merger could put yet thousands more out of work, although no announcements have been made yet.

Ripple effects

As the newly acquired companies settle in, there could be a ripple effect for their suppliers, law firms, and accountants. The mergers could also force smaller companies to combine, says Raul Martynek, CEO of Eureka Networks, a New York-based communications company. "It's the only way to survive in this new reality," he says.

Eureka, in fact, is an example of the shifting dynamics in the industry. Five years ago, the company emphasized growth. Today, says Mr. Martynek, the business model is predicated on efficiency. For example, in 2000, his company had 700 employees. After 9/11 and the telecom implosion, the company downsized to 75 employees - its size today.

"We're doing four times the revenue we did in those days," says Martynek, who has been acquiring companies himself. "There will be more synergies but also more cuts."

Few layoffs will come from the blue-collar side of the companies because these trades are highly unionized. "It's tough to lay them off," says Martynek.

Instead, most of the cuts are expected to be on the white-collar side. SBC has already said it would have 5,100 excess managers. An additional 5,100 will be cut from sales and other parts of customer support. Yet more layoffs are likely in human resources, regulatory, and lobbying operations.

Verizon said recently its staff reductions would focus on networking, legal, sales, and IT departments. …

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