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LAYOFFS COULD HIT RECORD IN ’93 AS 25% OF COMPANIES PLAN CUTS

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Layoffs and job eliminations could reach record numbers in 1993, a survey released by the American Management Association says.

It said one out of every four companies surveyed is planning work-force reductions by June 1993. That's the highest level since the association began the survey six years ago."Companies will continue to downsize frequently and deeply as they seek an irreducible core of permanent employees," Eric Greenberg, the association's survey director, said Thursday.

The September 1992 survey polled human resources managers at 836 member companies.

Corporate layoffs and cutbacks have been a major contributor to the nation's sense of economic malaise, one of the most important issues in the presidential campaign. But the study suggested that the general trend of work-force reductions will persist regardless of who wins the election.

Just in the past two weeks, General Dynamics Corp.'s Convair division, Westinghouse Electric Corp., American Airlines, and United Technologies Corp.'s Pratt and Whitney jet engine unit announced substantial staff cuts.

"Downsizing started out as a competitive measure, became a trend and now seems to be addiction," Greenberg said.

Until three years ago, most companies blamed the job cuts on non-economic reasons, such as improved staff utilization, increased automation and technology, and transfer of production or work. Beginning in 1990, the majority of companies said the recession was the main reason for the layoffs. But that trend appears to be shifting again.

While the weak economy is still responsible for the majority of cutbacks, 63 percent of the companies cited it as the primary reason this year, down from 73 percent last year.

This is important because cutbacks done for non-economic reasons are usually permanent and more severe, while companies often replace workers laid off for recessionary reasons, Greenberg said.

Still, many companies that shrink don't need to, Greenberg added, saying that three-quarters of the businesses that downsize are profitable before they distribute the pink slips.

The survey also showed that downsizing doesn't always increase profitability. It found that fewer than half of all companies that downsize increase their profits in the following year.

Worker productivity is just as likely to decline as to increase, the survey also found. "Downsizing is certainly no ticket to improved performance," Greenberg said.

While the number of down-sizings continues to grow, companies are making slightly smaller cuts, the survey showed. Between July 1991 and June 1992, 46 percent of the 836 companies surveyed cut staff by an average of 9.3 percent. In the previous year, cuts averaged 9.6 percent.

Middle managers are most likely to get laid off. While they make up 8 percent or less of the work force, they accounted for an average of 22 percent of the jobs lost, the survey found.

Manufacturing enterprises are more likely than service companies to cut jobs, and larger companies more likely than smaller ones, the survey found.

Layoffs are most severe on the Pacific Coast. Fifty-nine percent of companies surveyed there reported reductions, 48 percent in the Northeast, 47 percent in New England, 42 percent in the Midwest, and 38 percent in the South.

Greenberg called the results "alarming," adding that the actual number of companies that down-size is typically "two to three times higher" than the number that plan to do so at the beginning of each survey period.

The association said the survey had a margin of error of plus or minus 3 percentage points.