Part of American Telephone & Telegraph Co.'s effort to reach out in new directions is an intensifying program to trim a work force that in the old days was as stable and secure as AT&T's own profits and dividends.
The old stability ended with the breakup of AT&T on Jan. 1, which plunged the company into a fast-track battle for computer and telecommunications markets in this country and worldwide. In this race, AT&T quickly found it could not carry its old overhead and employe costs, its officials say. "It's a difficult adjustment, but it is very much a part of the competitive world we're entering," said Francis J. Heffron, executive vice president for planning and administration at AT&T Technologies.
Just last week, AT&T announced that its technology group, which contains the one-time manufacturing giant Western Electric Co. and the company's consumer products, network systems and technical systems units, would eliminate about 11,000 unspecified jobs, adding to the 32,000 already eliminated this year. AT&T Technologies employs about 255,000 of AT&T's total of about 373,000 workers.
It is a painful process that has spawned hundreds of rumors throughout the company, compounding AT&T's difficult competitive situation in every field it has entered. Moreover, company executives hint that further cutbacks are likely.
"We're trying very hard to get the bulk of the force reductions behind us by the end of the year or early next year," James E. Olson, vice chairman of AT&T and chairman of AT&T Technologies, told workers in a telephone address six days ago. "However, while this is my best estimate of what is in store for the near term, I cannot say with certainty what lies ahead."
Observers of AT&T think more cutbacks are virtually certain. "I would suspect that there would be further cuts, another 30,000 to 40,000, maybe even more," said Fritz Ringling, an analyst at the Gartner Group. "It is a high-cost labor force."
The changes, however, will not come without risks of lowered morale and mounting pressure from organized labor for reductions in management ranks and overhead costs before further cuts in the number of hourly workers are made.
Glenn Watts, president of the Communications Workers of America, which represents about 90,000 members of AT&T Technologies' work force, fired off telegrams to officials of AT&T last week saying the new round of cuts "dropped virtually out of the blue." Watts called on AT&T and the seven regional telephone companies split off from the Bell System to begin national negotiations over the layoffs this month.
"We insist upon the right as the representatives of these workers to be a part of the process of determining force adjustments and how our members are to be treated," Watts wrote, also charging that AT&T and the regional companies have not adequately coordinated efforts to retain workers.
"You are talking about the starkness of people with considerable service out on the street after they've given their careers to work for this company," said Dina Beaumont, Watts' executive assistant. "There are thousands of people on tenterhooks."
For AT&T, however, the problems of maintaining such a work force as it dramatically changes direction are obvious. It has been a painful period for the business, with AT&T Technologies reporting a loss of almost $55 million in the second quarter on sales of $2.88 billion, after reporting a first-quarter profit of about $68 million.
Responding in part to those kinds of pressures, Olson has ordered quick overhead cuts of at least 20 percent in the AT&T sector he oversees. There are no firm figures, but outsiders say he may be only halfway there.
Calling for what he termed a "radically different cost structure," Olson said last week that the objective of the cuts is nothing short of a "fundamental rethinking of every aspect of our operations -- with no organization, no activity, no strategy exempt from the process."
Of the 11,000 jobs eliminated, 6,000 are in AT&T Information Systems, and a quarter of those are management jobs, the company said. About 14,500 jobs were "phased out" there just this year, Olson told employes.
In Technology Systems, AT&T's computer and component arm, the closing of plants in Illinois and New Jersey has resulted in the elimination of 2,100 jobs and the expected cutback of another 5,500 over the next 15 months. Even at Bell Laboratories, 150 "administrative" jobs will be eliminated by year-end, according to Olson.
Yet, just before divestiture, AT&T Technologies picked up about 60,000 installers and other service representatives from the regional operating companies, a group that for the most part installed and serviced rented or leased equipment. On top of that, a substantial effort to encourage early retirements last year in the technology area did not yield the desired dramatic results.
But with AT&T moving rapidly toward becoming primarily a marketing operation, selling a broad range of equipment from computers and complex call-switching devices to basic home and business telephone systems, that big service force looks increasingly unnecessary.
"We have been bringing on a variety of new products in the high-tech area where installation is modular in its nature, where the plug-in can be done by the customer and where products require less service," Heffron said.
According to Ringling, AT&T's employe costs -- relatively high by industry standards -- translate into higher product costs than many of its competitors face.
In the predivestiture AT&T, Western Electric, in particular, was subject, to a certain extent, to the ebbs and flows of the national economy. But there was little employment change at the corporate staff level, in the long-distance business and in the operating companies.
But competition is growing in every phase of the business except for the provision of basic local service. Even there, the work patterns have been changed, with increasing numbers of consumers buying and installing their own equipment.
What has brought CWA's anger to the surface, however, is the union's view that AT&T management has placed the brunt of those problems on the backs of hourly workers.
"We haven't seen statistics, and we haven't been convinced that the company has taken all reasonable steps to eliminate waste, duplication and excess managerial levels," said CWA's Beaumont. "It is the overhead that does not make them competitive. The sacrifice has fallen on the work force. There has to be equality of sacrifice."
Heffron counters by noting that wage increases and promotions are on hold for AT&T management and that hiring is frozen at most company levels. "The management area is being approached and analyzed with equal vigor and an equal sense of fairness," he said.
It is unlikely that CWA and the International Brotherhood of Electrical Workers can stop the changing patterns of employment at AT&T. The Gartner Group's Ringling and other analysts say that, even if AT&T products are technologically competitive, the company's cost structure limits its growth potential.
"They've done almost everything easy that they can, like offering early retirement," Ringling said. "Now they've got to tell people, 'You retire or else.' And they have to say to people that their jobs depend on performance. The important thing about these new cuts is the statement from them that they are serious and that they are going to continue to cut."
As Olson told employes last week, the competitive pressures are only likely to accelerate, and "there will never be a return to business as usual."