Adjusting course: aligning costs with revenue (*sigh*)

[LaStrega]

Let me preface the following by informing you that I, a GCIU Local 1-M member, am still negotiating a contract ... it'll be three years of negotiation come May 17 of this year. Until I get a contract, the Star Tribune cannot do anything to me. No buyout offers, no layoffs, no firing. So I've got that going for me, I guess.

Now to the reason for my post: I found the following email in my inbox when I got to work today. The tallies below will bring the total number of buyouts, layoffs and firings to over 600. Some of the positions are Union positions (for instance the Fleet Drivers are in the Circulation Dept.) and it makes me sick. Since the beginning of the year, all but three of our Techs took a buyout (out of 15). 35 production artists (who had also voted to go GCIU but had no contract yet) had their jobs outsourced to India. I could seriously go on and on, instead I'll edit myself.

So, here's the letter (warning it's kinda long):

From: CHRIS HARTE - PUBLISHER
To: All Employee Message
BC: Amberlynne LaStrega
Subject: Adjusting course: aligning costs with revenue

In my note to you a couple of weeks ago, I tried to give you a realistic picture of the state of our business. While we are a very strong and profitable company and by far the leading media organization in the Twin Cities, we are currently battling persistent revenue declines, as are most media companies. We have continued to analyze possible expense reductions in each area of the company to deal with our revenue gap and to make us more efficient going forward. We have now settled on several actions that we will be taking over the next few weeks, and I hope it’s clear that these steps are designed to keep us strong for the future.

We recognize that this follows a year of aggressive cost-cutting, including a significant workforce reduction mostly through voluntary separation programs announced last May. At the time, we thought these steps would be sufficient to stabilize the business, but our advertising revenue projections were too optimistic. Since then, the national and state economies have further weakened, and our key classified markets-real estate, automotive and employment-- have fared even worse than the overall economy.

Because of this, I am announcing some incredibly difficult decisions that come only after searching unsuccessfully for less painful alternatives.

First, I am announcing a wage freeze for all independent employees. Normally, we would be giving wage increases in the March/April time frame to eligible independent employees. We have not yet determined how long the freeze will be in effect. To a great degree, that will depend upon when our revenue starts to rebound. (Meanwhile, we will do our Performance Evaluation Assessments (PEAs) without the wage increase component.)

Salaries of senior executives-my direct reports and me- were frozen last month. Union wages are determined by individual union contracts, and we have just begun a process with Restructuring Associates (RAI), our consulting firm, to explain our situation to all our unions and seek their cooperation in addressing our significant business issues.

My second announcement is even more painful than the first. Today we will notify impacted employees of the elimination of 58 positions across the company. This is about 3 percent of our total workforce. These will be involuntary terminations, not a voluntary separation program, but those who are terminated will be offered the identical severance benefits as were offered to those who took buyouts last year.

About three-fourths of the involuntary terminations are in the Circulation Department, where we have recently made substantial changes to our operation through the introduction of new technology, streamlining of single-copy distribution processes and conversion to independent agents for management of home delivery. Smaller numbers of terminations are coming from around the company.

The third set of actions will be further cuts to our non-labor expense budget. As you know, wages and benefits are more than half of every dollar we spend on operations, and newsprint is roughly another 18 percent, leaving only about 25 percent of our cash expenditures for everything else. Despite the large cuts we have already made, I have asked our senior executives to do their best to find more reductions so that we can minimize the need for further job eliminations. Specific plans are underway or under study in every department, and we are implementing reductions whenever and wherever we can prudently do so.

Going forward, every department has been asked to continue looking at all possible solutions to become a more efficient company, including new technology and outsourcing (Amber: gods but do I hate that word!) of functions that are not core competencies to our business.

As we are taking these actions, I want be clear that the cuts we are announcing today have nothing to do with the Restructuring Associates project, which is just beginning. The RAI consultants are working with our managers to prepare a presentation on the state of our company, designed to give all our employees a better sense of what we are up against. I realize we are making some far-reaching decisions without everyone fully understanding why we must take these steps.

But we are working as fast as possible to close this information gap. If you have gone to RAI’s website ( http://www.restructuringassociates.com ), you know that shared understanding and collaborative problem-solving is fundamental to their approach. Our hope is that in the next couple of months we will have conducted sessions throughout the company that explain our situation in much more detail.

I also want to emphasize that while we are cutting in some places, we are investing in others (Amber: one investment was to give bonuses to Managers who significantly cut the numbers in their respective departments ~ bravo) as we adjust our course to stay competitive in this rapidly changing media environment.

We fully realize that our success as a company depends upon all employees understanding what our direction is and why, and in the weeks and months to come we will provide you with the information you need to help us get to the right solutions for our long-term and mutual success.

Unions -:- Because Work Is Not A Democracy