Saturday August 04 05:18 PM EDT
Dallas Bleeds as Job Cuts Hit Its Tech Sector
By RICHARD A. OPPEL Jr. The New York Times
In a sign of how far the telecommunications industry's troubles have extended past the Silicon Valley, more than 10,000 Dallas area high-tech workers have lost their jobs this year.
RICHARDSON, Tex., Aug. 3 — Early last year, with the Dallas area unemployment rate hovering at about 3 percent, companies in the Telecom Corridor here in the northern suburbs were so frantic to lure talent that one of them asked whether it could pay professors at the University of Texas at Dallas $5,000 for each recruit, said the school's engineering and computer science dean, William P. Osborne. "I said: `It's a free country. I can't stop you from doing that, but I'm absolutely opposed.' "
But now, pink slips are being handed out like last year's signing bonuses. With the severe downturn in telecommunications that began late last year, the flow of cash from investors and orders from customers has ceased, throwing out of work thousands of prosperous employees who had never likened their job security to working at a dot-com. The local unemployment rate in June stood at 4.2 percent, still moderate but up 50 percent, from 2.8 percent, in six months, according to the Federal Reserve Bank of Dallas.
Compared with the rest of Texas, Dallas has always had a fairly diversified economy, with plenty of jobs in financial services, real estate, transportation, retail and energy. In recent years, the region has also capitalized on the nation's technology boom, establishing in Richardson a niche for designing, building and selling telecommunications gear.
Since the end of last year, however, more than 10,000 Dallas-area high-technology employees have lost their jobs, industry officials say, most of them in and around Richardson at companies including Nortel Networks, Alcatel and Ericsson. The region's experience illustrates how the carnage from the collapse of the corporate spending-and-investment binge, led by technology, has spread far beyond places like Austin and Silicon Valley.
Today's unemployment report indicated that across the nation, corporations continued to cut their payrolls in July, although the unemployment rate was steady. Economists are debating whether the continuing cutbacks in corporate spending, especially on technology, will leave the economy at a standstill, or worse.
The economic reversal has been especially abrupt for victims like Denny Buck, 50, who made a six- figure salary working at Alcatel, the French telecommunications giant, which has announced about 1,400 layoffs here in the last four months. Mr. Buck fears he might have to sell his house if he does not find work. He has some optimism, but he notes there are now thousands of similarly skilled people in his predicament. "It doesn't help to have all those people battling for the same jobs," he said.
Fiona Sigalla, an economist with the Federal Reserve Bank of Dallas, confirms that Mr. Buck is not alone. "High tech in general — but telecom in particular — provided a tremendous positive stimulus for economic growth here during the last five years," she said. But with the telecommunications bust, "we've gone from having an industry hiring rapidly and building lots of space to an industry contracting and laying off large numbers of people."
In Texas, as in much of the country, technology has become an increasingly important part of the economy. In the state's electrical and electronic equipment industries, total industrial production has soared 125 percent since 1987, according to the Dallas Fed. By comparison, oil and gas extraction experienced only a 4.9 percent gain over the same period.
The telecommunications industry's sharp downturn helps explain the rise in the nation's unemployment rate over the last year, from 3.9 percent in October to 4.5 percent last month. Across Texas, the June unemployment rate stood at 4.6 percent, according to the Dallas Fed, up from 3.7 percent at year-end.
As one of the nation's more rapidly growing areas, Dallas is likely to continue to outperform much of the nation, economists say. "Dallas is large enough and diverse enough to withstand this, particularly if this is temporary, and we think it will be," said Ray Perryman, head of an economic consulting firm in Waco, halfway between Austin and Dallas.
He predicts the region's economic output will grow 3.5 percent annually over the next few years while employment grows at slightly more than 2 percent, aided by gains in businesses including those that support aviation and international trade. That growth is "well below the last couple of years, but a lot of cities would love to have it," Mr. Perryman said.
But in addition to the layoffs, there are other clear signs of the industry's retrenchment affecting the region. Office vacancy rates in Richardson and neighboring Plano have more than doubled in the last year, to 14 percent from 6 percent, according to Tracy Fults, an executive director in the Dallas office of Kennedy-Wilson International, a real estate firm.
Tenants in the two cities have vacated about 580,000 square feet of office space, the rough equivalent of a 30-story office building, since the beginning of the year, and plans for another 450,000 square feet have been stalled, Mr. Fults said.
Last year, for example, Cisco Systems announced plans for a seven- building campus in Richardson. But the company recently scaled back those plans, putting two of the buildings on hold, and said it would build, but not occupy, one of the others.
Similarly, venture capital investment in Dallas has plunged, in line with a nationwide pattern. In the second quarter, Dallas companies received $176 million in venture capital investment in 17 deals, according to VentureWire, a New York firm that tracks venture capital investment. In the period last year, Dallas companies got $469 million in 37 deals.
The Dallas area's emergence as a telecommunications center goes back to the early 1980's. Richardson was uniquely prepared to capitalize on the breakup of American Telephone and Telegraph. It boasted not only Texas Instruments, which remains one of the largest employers, but also Collins Radio, then a division of Rockwell International, which specialized in military telecommunications and was one of the few companies that had technological sophistication to rival AT&T's.
Civic and business leaders had also worked to establish a new branch of the state university system, the University of Texas at Dallas, to train technology workers. Situated in Richardson, the university is now one of the largest producers of computer science graduates. In all, more than 600 technology companies are within five miles of the school, employing more than 80,000 workers.
But their rapid growth ended abruptly last year, as the flow of capital from Wall Street ceased while large companies curtailed spending on telecommunications equipment. Some customers pushed large amounts of inventory back to their suppliers.
"The basic problem was manufacturers were building and service providers were buying and installing on forecasts for demand that just could not go on forever," said Dean Osborne, who believes an industry rebound could be a year or more away. "You won't see the telecom industry have this bad a downturn again in our lifetime."
One of the region's business leaders, however, said that the impact of the cutbacks might be overstated because as many as 40 percent of those who have been laid off have found new jobs in the industry.
"There is a perception in the tech world that nobody is hiring, but I don't think that's true here," said Ron Robinson, who as president of the Technology Business Council, a trade group in Richardson, has played a large role in luring new employers. In particular, many small companies are hiring, he said.
But at after-work retreats like Nedley's, a bar and restaurant here, farewell gatherings have replaced the celebrations of a year or two ago for co-workers who had landed jobs with promising start-ups.
Employees who are stunned to find they have lost their jobs often want to go out for drinks with their colleagues, said Ned Gilblom, the restaurant's owner. "If they just drop the bomb on them," he said, "they say, `We need to go to a bar.' " His lunch business, he added, is off 30 percent.
Many of those laid off this year have been socked with another setback as the value of their past compensation — much of it based on shares of company stock, including 401(k)'s — has plunged. "I know friends who have lost millions; it's awful," said Stephanie Schweizer, 36, who was laid off by Nortel Networks in April after six years with the company and has yet to find another job. Shares of Nortel, which closed Friday at $8.04, have fallen 90 percent in the last year.
Until recently, Ms. Schweizer said she had considered her job secure. "I never thought telecom was going to go away," she said. "We were a family. We were just soaring. Everyone was making their numbers. It was just such a positive place to work."
Recently, she ran into a former co- worker who had taken a job selling women's clothes at a local mall. "It's really sad to see someone basically be reduced to working as if they had never gotten a college degree," she said. "It's like a death. Every day, I'm talking to people about who is on the chopping block next."
LINK
-- Anonymous, August 05, 2001
WHAT A CROCK OF SHIT. NYC "SELF SERVING" AT THE NY T.'S WORST.
MEANWHILE, HOMES AND COMMERCIAL R.E. ARE 1/2 THE COST OF MOST MAJOR
US CITIES. 4/3/2 IN GOOD AREAS AVG: $137. B OFFICE $20 VS. 40 IN NYC
AND 50 IN BOSTON. WE HEAR THAT SAN FRANCISCO THE "GOLDEN CITY" HAS A
REALLY BIG PROBLEM BUT ONE OF MY FRIENDS JUST GOT 7 OFFERS OVER A
$1.1 MILLION ASKING.
THE ONLY SERIOUS PROBLEMS WE HAVE HERE ARE IN THE AMOUNT OF TRAFFIC
ON ALL MAJOR STREETS AND EXPRESSWAYS. WE ARE STILL GROWING BUT THE
NUMBER OF 'OUT OF STATE" CAR LICENSES HAS INCREASED. THAT IS A SURE
INDICATION THAT PEOPLE ARE IN DFW LOOKING FOR JOBS WHICH WE STILL
HAVE. THE "IMPACTED" TELECOM WAS FROM OVEREXPANSION. SO INSTEAD OF
GROWING AT 100% THIS YEAR THEY WILL ONLY DO 30%. THE INVENTORY GLUT
IN ELECTRONICS IS BEING ABSORBED AND YOU WILL BUY 256megs OF dRAM
WITH YOUR NEW BOX FOR WIN-XP LATER THIS YEAR.
THE MALLS ARE PACKED WITH SHOPPERS. A NEW ONE CALLED "THE SHOPS OF
WILLOW BEND" WAS JAMMED LAST WEEKEND ON THE OPENING. DFW
RATES "SHOPPING" AS THE NUMBER ONE TOURIST ATTRACTION. 12% OF TOURIST
LIST IT AS THEIR NUMBER ONE REASON TO VISIT DALLAS, THE MOUNT OLYMPUS
OF "SHOPPING".
ALL THAT HAPPENS IN A MINOR CUTBACK LIKE THIS IS THAT THE OWNERS OF
REAL ESTATE AND THE CORPORATIONS MAKE A LITTLE LESS MONEY. THE
DOWNSTROKE ALSO IS SEEING AN UPSTROKE IN "OLD LINE" COMPANIES FROM
OIL, TO TRANSPORTATION TO WAREHOUSING AND MANUFACTURING. BORING BUT
THEY PAY THEIR BILLS. SAME FOR THE COLLECTION OF RESTAURANT COMPANIES
HERE LIKE CARLSON AND BRINKER.
WE ARE STILL AT UNDER 5% UNEMPLOYMENT AND......WE BUILT OVER 8
MILLION SQ. FT. OF OFFICE SPACE AND ONLY 1.9 STANDS VACANT. TELECOM
HAS BEEN CRUSHED THANKS TO CISCO WHICH STARTED 2 BUILDINGS THAT WON'T
BE FINISHED AND RICHARDSON NEEDS SOME NEW COMPANIES. I ESTIMATE THE
14% WILL BE REDUCED TO THE NORMAL 6-9% BY MID-2002. LAND LORDS ARE
STILL MAKING MONEY. SW BELL IS DOING WELL AND EXPANDING AS ARE *ALL
OLD LINE COMPANIES*.
NY TIMES PROPAGANDA TO PREVENT JOB LOSSES TO DFW BECAUSE WE ARE
COMPETITIVE. OPPEL Jr. USED TO WORK FOR THE DALLAS MORNING NEWS AND
HIS FATHER WAS A REPORTER ALSO. NOW HE SHILLS FOR "THE PAPER OF
RECORD".
MEANWHILE:
http://www.dallasnews.com/business/stories/438360_giving_08bus.A.html
In slow economy, corporations are still giving to
charities
08/08/2001
By Patricia V. Rivera / The Dallas Morning
News
Betty Vanderwoude felt the fallout of shrinking stock wealth in
January when
donations for the Dallas Area Red Cross fell far below usual
expectations for
that time of the year. Overexpenditures in local relief efforts
placed the
nonprofit at $500,000 below budget, and the prospects of large
contributions
looked dismal.
"In January, we were very concerned about what the numbers would
look like at
the end of the [fiscal] year that ended in June. There was so much
talk about
the decline of the stock market and the soft economy that we just
didn't know
what to expect," said Ms. Vanderwoude, director of development for
the Dallas
Area Red Cross.
What she has found is that despite job losses and budget cuts,
corporations
have upheld their financial commitments. The organization, which gets
40 percent
of its gifts from businesses, raised $1.7 million – or 105 percent of
its goal.
Early indicators show that 2001 corporate philanthropy is steady
nationwide.
Charitable organizations say businesses' growing emphasis on
community
involvement seems to be safeguarding corporate giving.
"Maybe 10 years ago, it would have been the first thing cut
because it was
really more about writing a big check," said Cheryl Kiser, director
of marketing
at the Center for Corporate Citizenship based at Boston
College. "Philanthropy
has become so much more visible and strategic that pulling back would
have a
huge public perception change on the organization."
In a survey released in July by the Chronicle of
Philanthropy, 60
percent of corporations reported donating about the same as in 2000.
Contributions are expected to increase by 4.1 percent this year, the
publication
reported.
This follows several years during which the top 400 charities
experienced
double-digit gains in giving. Corporate contributions increased 12.1
percent in
2000 to $10.86 billion and 13 percent in 1999.
Good will aside, contributions have also remained stable this year
as a
result of increased perseverance and determination on the part of
nonprofit
leaders.
Ms. Vanderwoude said the Red Cross sought new donors and worked
extra hours
to make up the difference.
"Nonprofits operate just like the corporate world – if they think
there will
be significant drops in the quarterly reports, they start maneuvering
to take
care of these type of things," she said.
Anxiety about future
Still, many worry that donations may eventually drop as
business leaders
continue to tighten their belts.
"We're keeping pace with last year, but it will be interesting to
see what
will happen in the fourth quarter," said Michelle D. Monse, associate
director
of the Dallas Foundation, the oldest community foundation in
Texas. "Many people
are in the habit of making donation decisions at that time."
Ms. Kiser of the Center for Corporate Citizenship said the
corporate giving
trend has yet to play out. "We wouldn't see a slowdown now since many
of the
budgets were set two years ago. The changes may come in the next year
to 18
months," she said.
Ms. Kiser noted that already, fewer companies are attending
training seminars
sponsored by the Center for Corporate Citizenship.
Small groups struggle
Large organizations with strong corporate ties are more
insulated from
drastic changes in contributions, charities say. United Way of
Metropolitan
Dallas, for instance, raised its goal for 2001 by 11 percent over
last year to
$55 million.
It's the smaller groups that may struggle to collect what they
have in past
years. Corporations are more likely to avoid occasional sponsorships
with groups
they have little interaction with, Ms. Kiser said.
"I'm detecting a cautiousness about corporate giving," said Liz
Flores-Velasquez, executive director of the Greater Dallas Community
Relations
Commission.
She had hoped to raise at least $75,000 by the beginning of the
summer for
the commission's annual November luncheon, which recognizes an
individual who
has improved race relations and has promoted multicultural
understanding. So
far, she's collected $30,000.
"I don't know that we'll make it. I'm really starting to worry,"
she said.
Practical Parenting Education of Plano maintained its budget of
about
$229,000 by participating in additional fund-raising events.
"We've felt a lot more stress and financial pressure this year
than in the
past," said Linda Johnston, executive director of the group designed
to provide
a support network for low-income parents.
For most charitable groups, however, fluctuations in corporate
donations have
little impact. Corporate giving accounted for 5.3 percent of the $203
billion
collected in 2000, according to Giving USA.
"I'd be more worried if we saw a reduction in state and federal
money," said
John Hurst, director of the C.I.T.Y. Youth Shelter in Plano.
Effect on volunteerism
Where businesses have made a difference is in their long-term
relationships with charitable groups.
Corporations are more involved in their communities than in past
years, and
it goes beyond financial contributions. Many are also encouraging –
and paying –
their employees to make a difference through volunteer work.
Verizon Communications, which announced in February that it would
eliminate
10,000 jobs, created a cyberfoundation to ensure the future of
community
relations.
Verizon Foundation is giving $70 million this year. Because it's
online, the
foundation operations are very cost-effective, said Verizon media
relations
director Bobbi Henessy.
In addition, Verizon employees who donate more than 50 hours each
calendar
year receive a $500 grant in the name of their favorite nonprofit
group.
Financial services firm Andersen released its 50 summer interns
for an entire
week so they could give their time to designated groups.
"We have an expectation that all of us participate in the areas of
the
community that we feel are important, regardless of whether the
economy is good
or bad," said Scott Wilson, human resources director for Andersen's
Southwest
region.
But Robert K. Goodwin, president of the Points of Light
Foundation, said he's
concerned that perceptions about the worsening economy might
negatively affect
volunteer work.
"People are hearing about industrywide downturns, thus causing
them to be
anxious when that downturn is going to affect them.
"That general angst could cause mainline employees to worry if
volunteering
can be justified when, in fact, they may be under impression that all
their time
may be necessary to fulfill bottom line expectations," he said.
The bottom line
The Center for Corporate Citizenship and the American
Productivity &
Quality Center have studied how helping the community can benefit the
bottom
line.
"Innovative community relations strategies help organizations
build corporate
reputation, support customer acquisition, and create new market and
product
development," said Steve Rochlin, director of research and policy
development at
the Center for Corporate Citizenship.
Now he's working on ways to measure the effects of corporate
charitable
contributions on reputation, financial performance and relationships
with
employees.
Businesses have already bought into the benefits of volunteerism.
A Points of Light Foundation survey found in 1998 that 81 percent
of
companies intentionally linked employee involvement in volunteer
programs to
their overall business strategies, compared with only 31 percent in
1992.
"Respondents to the survey unanimously agreed that corporate
volunteering
helps create healthier communities and improves a company's public
image; 97
percent say these programs improve employee teamwork," according to a
summary of
the study.
Mr. Goodwin of the Points of Light Foundation said the nation has
gone
through a decade of emphasis on the benefits of volunteerism and
philanthropy.
"So much so that now more and more people, including those in the
workplace,
understand that service and charity is not simply nice, it is
necessary," he
said.
-- Anonymous, August 08, 2001
