The terms abound: obsolescence, overcapacity, redirection, competition. But for Western Electric Co. nowadays, they all mean one thing--pain.
The agony is manifested in layoffs and plant closings, such as those announced last week in Baltimore, Kearny, N.J., and Cicero, Ill. In all, 6,700 Western Electric workers, 2,300 of them in Baltimore, will lose their jobs.
The actions will occur "in stages over several years," the company said.
That's tough. That's pain. But telecommunications industry analysts say that, in the case of Western Electric, it's necessary.
"You could interpret this as a negative. The fact that you are laying off more than 6,000 people certainly sounds ominous," said an E. F. Hutton analyst.
"But another way of looking at it is that the company had too many people in the first place. If it's going to try to move aggressively into the telecommunications market, it is going to have to lose some weight," said the analyst, who requested anonymity.
Western Electric officials said the same thing. "On the employment side, we've been trending down for well over a year," said spokesman Bob Burke. "We have tremendous overcapacity. We're trying to correct this through shrinkage."
What is happening here involves more than recession. Western Electric did an estimated $13 billion worth of business last year. The company is not poor.
What is happening is change, a massive remodeling of the domestic telecommunications industry in which Western Electric and its current owner, American Telegraph & Telephone Co., are major pieces.
Western Electric had been the basic source of AT&T's telecommunications equipment since 1882, some 20 years before it became the property of the telephone company. It was a good, safe relationship. AT&T virtually monopolized the domestic telephone service that relied on Western Electric goods.
But those days faded in the light of new technologies, created and marketed by new telecommunications companies, AT&T's competitors. In an antitrust settlement with the Justice Department, AT&T agreed to shed its 22 operating companies and Western Electric, it's largest subsidiary.
The divestiture--in which the operating companies will become seven regional concerns and in which Western Electric will have to run against younger, leaner, and often faster competitors--takes effect Jan. 1, 1984.
Western Electric currently is operating at about 60 percent of capacity, an inefficiency aggravated by age and duplication of function, company officials say.
"The whole electronics industry has been switching from electro-mechanical products"--long the staple of Western Electric--"to electronic devices," Burke said. Electro-mechanical products, such as relay switches and related apparatus, are larger than their miniaturized electronic cousins. Larger devices use more labor in production and space in storage--the kind of overhead a business can afford when it has a wealthy corporate parent and the parent has little or no competition.
"There's been a shrinkage in the size of components," and a subsequent shrinkage in the number of people to make the new products and the amount of space needed to store them, Burke said. Western Electric, for example, laid off 14,000 people last year. Another 5,000 left through attrition. The company now has 136,000 workers.
He said the Baltimore plant, which produces relays and high-power transformers, and the plants in Kearny, N.J., and Cicero, Ill., were "three of the oldest plants in the company."
Work done at the old plants is being shifted to newer sites--all post-1950--in Dallas, Phoenix and Omaha.
"It's extremely painful to take these actions because of the good employes and the fine communities that will be affected," Western Electric President Donald E. Procknow said last week in announcing the actions. But, he said, "we must face realities in order to remain the best in our field."
Unions representing telecommunications workers caught up in the changes say they are trying to face realities, too. (The Baltimore plant is represented by an independent union, and the Cicero and Kearny plants are represented by the International Brotherhood of Electrical Workers.)
"We're no longer going after job security in the traditional sense--holding the same job in the same place for a lifetime," said Glenn E. Watts, president of the Communications Workers of America, the nation's largest telecommunications union. "We want our people to be trained and retrained, so that they can move into meaningful jobs as the industry develops."
Procknow said Western Electric will take steps to minimize the effects of impending shutdowns and layoffs on affected employes. In the past, he said, those steps have involved job-search help, transfers, early retirement supplements, and "layoff allowances" of as much as 104 weeks of pay.