Firms turn to furloughs, pay cuts to avoid layoffs
Correctional workers Robert Hidalgo and Brittany Tofoya cuff an inmate at the Saguaro Correctional Center in Eloy. Private prisons are among the entities that have added workers.
Arizona’s 100 largest employers shed workers at a slower pace than state businesses as a whole during the past year as they turned to furloughs, pay cuts and other means to hold onto their workers.
Arizona Republic research found that companies which make up the 2009 Republic 100 lost about 10,000 workers, or about 2 percent of their workforces, in the past year.
That compares with the 186,000 jobs, or roughly 7 percent of the total workforce, lost statewide in the past 12 months, according to the U.S Bureau of Labor Statistics.
The Arizona Department of Commerce predicts that the state will lose 146,000 jobs, or about 5.6 percent of the workforce, this year.
“Big employers understand the damage that can be caused by layoffs and are finding all sorts of ways to retain their employees,” said John Challenger, of Challenger, Gray & Christmas, a Chicago-based outplacement firm.
Some alternatives that companies are using to avoid layoffs include furloughs, reduced hours, pay cuts, elimination of perks, and reduced bonuses. Generally, employers are finding that employees are willing to share in their company’s hardship by accepting temporary cuts in pay.
Microchip Technology and Arizona Republic parent Gannett Co. Inc. were among the big businesses with large workforces in Arizona that used a combination of furloughs and wage freezes during the past year to avoid layoffs.
“When times got bad, we had the options to lay off employees or find creative ways to keep them,” said Steve Sanghi, Microchip’s chairman, CEO and president. The company chose to get creative and has, through a program of furloughs and pay and bonus cuts, avoided laying off any of its 4,800 global employees.
“During good times, we shared the benefits with our employees, and they have been willing now to share our hard times,” Sanghi said.
As a result, Microchip could be in a position to quickly rebound when the economy recovers.
Challenger noted that companies with workforces in place often make significant gains coming out of a recession, particularly if their competitors have to re-staff.
During the past year, The Republic found that “recession proof” businesses such as hospitals and private prisons added workers and were some of the bright spots in a generally dismal year for Arizona workers.
Military contractors and firms that provide financial services to consumers generally added workers during the past 12 months, despite the worsening recession.
Retailers, mining companies, car dealers and construction businesses were the most affected by the recession and eliminated thousands of jobs during the period.
Walmart remained atop the Republic 100 with 31,594 full-time equivalent employees, about 200 fewer than last year, when it added close to 1,000 people. While the retailer continues to open stores in Arizona, spokeswoman Delia Garcia said the pace has slowed.
Corrections Corporation of America, operator of six private prisons in Pinal County, added about 700 employees during the year, due to the opening of its 3,060-bed La Palma prison in Eloy. Corrections Corp. moved up on the Republic 100 to No. 53 from No. 70 a year ago.
Spokeswoman Louise Grant said the company continues to hire at the new prison, which will employ about 600 people. While many companies are reporting a decline in earnings, Corrections Corp.’s 2008 profit grew 14 percent.
Health-care companies also fared well during the past year. Banner Health, Catholic Healthcare West, John C. Lincoln Health Network, and other health-care companies all added employees in the period.
The big gainer was hospital operator Banner Health, which added more than 5,000 positions, largely due to its acquisition of Sun Health (No. 37 on last year’s list). The deal cemented Banner at No. 2 this year. Banner now employs 27,458.
Banner laid off 334 people in January, but was able to find other jobs for 181, according to spokesman Bill Byron.
Medical-device maker W.L. Gore & Associates and health-care manager Schaller Anderson also added a significant number of workers during the year.
Securities firms such as Charles Schwab & Co. and the Vanguard Group added employees along with insurance providers Scottsdale Insurance Co., State Farm and Blue Cross.
The employment gains, however, were more than offset by industries such as mining, retail and construction, which have been badly beaten up by the recession.
Mining companies Freeport-McMoRan Copper & Gold Inc. and Asarco LLC, which were aggressively hiring a year ago, shed thousands of employees in the past six months as metals prices plunged. Freeport slipped from No. 15 to No. 23 on the Republic 100; Asarco fell to No. 66 from No. 53.
Freeport spokesman Eric Kinneberg said it would require a sustained improvement in economic conditions and demand for copper before the company could increase production and rehire laid-off miners.
Among the top five employers, Honeywell International Inc. fell from fifth to eighth place after shedding about 2,000 jobs during the past year. Honeywell also mandated 15-day furloughs for some of its Arizona employees.
Rinker Materials, a cement and building-materials provider, lost more than 1,000 employees as private-sector construction projects dried up.
Home Depot cut 3,000 Arizona positions and fell to No. 16 from No. 8, while competitor Lowe’s Companies trimmed 1,100 jobs.
Grocers, which added hundreds of jobs in 2007-08, pulled back in 2008-09. Bashas’ lost about 1,700 jobs as it closed stores and cut administrative expenses. Safeway made significant cuts while Albertsons and Fry’s Food Stores remained largely unchanged.
Bashas’ spokeswoman Kristi Nied said some underperforming stores had been kept open to preserve jobs and serve neighborhoods. With the recession cutting into grocers’ profit margins, Nied said that was no longer feasible.
New to the top 10 this year were Intel, Target and McDonald’s, which replaced Safeway, Bashas’ and Home Depot.
Wells Fargo moved to third place from fourth and Tucson missile maker Raytheon Co. jumped to fourth from sixth place a year ago.
The top 5
1. Walmart Stores Inc.
Industry: Discount retail.
Headquarters: Bentonville, Ark.
Arizona employees: 31,594.
Change from 2008: -191.
2. Banner Health
Industry: Health care.
Arizona employees: 27,458.
Change from 2008: +5,306.*
3. Wells Fargo & Co.
Headquarters: San Francisco.
Arizona employees: 14,000.
Change from 2008: No change.
4. Raytheon Co.
Industry: Defense contractor.
Headquarters: Waltham, Mass.
Arizona employees: 11,539.
Change from 2008: -156.
5. Apollo Group Inc.
Industry: Adult education.
Arizona employees: 11,467.
Change from 2008: +1,171.
* Includes acquisition of Sun Health.