Bell Atlantic may cut 1,100 jobs in state

August 16, 1994|By Michael Dresser | Michael Dresser,Sun Staff Writer

Bell Atlantic Corp. said yesterday that it would cut as many as 1,100 jobs in Maryland over the next 3 1/2 years as part of an effort to redesign the company for the intense competition unfolding in the industry.

The reductions, roughly one-fifth of the jobs that the Baby Bell expects to eliminate companywide, are part of a $2.3 billion plan to accelerate the company's transition from a labor-intensive telephone monopoly to a technology-driven multimedia competitor.

The job cuts in Maryland could affect one out of 10 Bell workers in the state, but local union leader Charlie Gearhart said he was relieved that the numbers were not worse.

"I expected them to come out and say, 'We're cutting heads and they're rolling today,' " said Mr. Gearhart, executive vice president of Local 2100 of the Communications Workers of America in Baltimore. As it is, he said, the time frame is long enough that the job cuts should be manageable through negotiation and attrition.

The Philadelphia-based regional phone company, which said three-fourths of the eliminated jobs would be those of unionized workers, did not specify where the cuts would occur or how many of the job cuts would be achieved by layoffs.

Dave Pacholczyk, a spokesman for Bell Atlantic, estimated that 800 to 1,100 of the company's 11,000 employees in Maryland would be affected by the cuts, which will begin to take effect next year.

The elimination of 5,600 jobs, amounting to nearly 8 percent of the company's 73,000 workers, was one of several important moves Bell Atlantic announced yesterday. In financial terms, the most significant action was the company's announcement that it would take a medicinal dose of red ink in 1994 to help secure its competitive position.

Bell Atlantic said it would chalk up a record $2.3 billion after-tax charge against its third-quarter earnings, resulting in a loss for the three-month period as well as calendar 1994. Of that amount, $2.15 billion is the result of an accounting change that essentially declares that the company's existing telephone network is worth less than the figure it has been carrying on its books.

Bell Atlantic stock closed yesterday at $56.625, down $1 a share.

The company said it was setting aside $100 million to cover the cost of the work force reduction, which continues a trend of telephone industry shrinkage that has been in effect since the Bell system was broken up in 1984. The cuts are expected to be concentrated among the 62,000 workers in the traditional telephone network.

While no details were available on which Bell Atlantic facilities would feel the impact of the cuts, Larry Babbio, the company's chief operating officer, said at a news conference that some of the company's data centers and engineering centers probably would be consolidated.

For managers, the prospects are grim. In the past, Bell Atlantic has thinned its managerial ranks by offering job buyouts. This time, executives might not be so lucky.

"We are probably not in the position of making new management offers," Mr. Pacholczyk said.

Mr. Pacholczyk said the means of staff reductions in the ranks of unionized workers would be a subject of bargaining when Bell Atlantic holds contract talks with the CWA next year.

Despite Wall Street's muted reaction to the news yesterday, Linda B. Meltzer, a telecommunications analyst with UBS Securities in Philadelphia, praised Bell Atlantic's move as "very forward-looking and necessary for the industry."

Industry analysts said Bell Atlantic's cuts were a case of a lean company becoming leaner. With its work force already down 8,500, or 10 percent, from its 1990 levels, Bell Atlantic was second-lowest among the seven Baby Bells in terms of employees per 10,000 access lines, with 33. Only Ameritech, with 31, had fewer.

While Bell Atlantic and other regional phone companies are becoming high-technology growth businesses, their need for workers is actually shrinking. The primary reason is technology. Many of Bell Atlantic's more than 200 central offices in Maryland, each of which used to require baby-sitting by technicians, now operate with no daily human oversight because sophisticated equipment can diagnose problems and summon help.

Mr. Cullen said the job cuts would have no adverse effect on customer service, but phone company workers wondered where Bell Atlantic would find any fat to cut in customer service operations.

"We've been busy," said Wayne Ciampaglia, a 25-year veteran cable-splicing technician in Baltimore. "Guys in my garage have been working 100-hour weeks keeping the service running."

Mr. Gearhart of the CWA said that earlier Bell Atlantic staff cuts had already taken a toll. "The service quality indicators just keep going down overall," he said.

Mr. Pacholczyk said recent internal service indicators had been a "mixed bag." He said harsh weather, including last winter's ice storms, had put a strain on the system.

In addition to the work force cuts, Bell Atlantic said it planned to leave some lines of business that no longer fit in its plans. The move would cost the company between $35 million and $45 million.

The multibillion-dollar accounting change -- $3.46 billion before taxes -- came about primarily as an acknowledgment by Bell Atlantic that the old order in the telephone industry is changing as the legal and technological barriers to competition are toppled. Legislation pending in the Senate would open the traditional local telephone monopoly to competition from cable television operators and other companies.

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