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Wal-Mart layoffs: irony and paradox February 13, 2009

Posted by vsap in Blogroll, Financial Crisis, Uncategorized.
Tags: , , ,

Recession and the law of unintended consequences work paradoxically and ironically, if that’s possible, in Wal-Mart lay-offs in Bentonville, AR, HQ.

From Ad Age, Feb. 11, by Jack Neff (excerpted, bold is mine):

“Part of the moves were to ensure that we continue to do well into the future,” Mr. (David) Tovar (“spokesman”) said. “They’re designed to … increase operational efficiencies to support our strategic growth plans and help reduce our overall costs.”

Despite the layoffs at the home office, Mr. Tovar said the company is creating management jobs in other locations, such as its apparel-buying and merchandising operations in New York, and adding store-level and district jobs nationwide.

The layoffs are particularly surprising, said one person close to the company, because Walmart traditionally has run a lean operation at its headquarters.

Not about improving margins
But the person said Walmart’s focus has been squarely on improving margins for more than a year, which could require belt-tightening despite continued top-line growth.

Mr. Tovar said maintaining or improving margins “is not what this is about. It’s about making sure we have the right people doing the right jobs in the right areas.”

Since Mr. Healy’s report it has been learned that Walmart will not be allowing Bentonville employees to transfer or relocate to New York for the apparel jobs, but will make new hires local (to NYC). Some in Bentonville have been offered store-level or district jobs indicated in the report. I would assume that those jobs don’t have the hours or other benefits of an HQ employee. Having seen first hand how Walmart and K-mart chew up and spit out competent store and district managers, this can’t be an exciting prospect for someone used to admin-type duties at HQ.

The unintended consequence is that even companies doing much better than average (or expected) in challenging economic times receive political cover for their personnel actions. “We” (consumers, share-holders) expect layoffs, so what’s the big deal? Walmart is just the most obvious although it certainly isn’t alone in this activity. Industrial companies which have reported strong earnings (meeting or beating “street” expectations) have gone about layoffs quietly since October 2008. We (the still employed) are apt to think “Gee, Charlie (or Shirley) is with XYZ conglomerate for twenty years and zap! How did their job become so suddenly unimportant?” I don’t think it did.

In these cases, layoffs are corporate crimes of opportunity not necessity.

I don’t have “wealth envy” as Neal Boortz calls it. It doesn’t bother me that companies do what they feel they must and I don’t impune the Walton family or former Walmart CEO Lee Scott for earning what they have over the years. After all, you and I granted them the wealth and lifestyle they have grown accustomed to, haven’t we? In America, we all have the freedom to do the same. They don’t need to heed groups like Walmart Watch that insist the Walton family and Scott should “share their wealth” with displaced employees.

I have walked away from jobs and I have been down-sized, and I don’t hold animosity against any of those companies. History has proven I was right about what would happen after my departure as often as they were. So, let’s see what history demonstrates about Walmart and all other companies that are doing well even today but feel they need to re-align, right-size, down-size or simply eliminate costs to be properly positioned for the future.

My guess is the displaced will be vindicated as often as their companies continue their success without them.



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