Dallas Bleeds as Job Cuts Hit Its Tech Sector

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Saturday August 04 05:18 PM EDT

Dallas Bleeds as Job Cuts Hit Its Tech Sector

By RICHARD A. OPPEL Jr. The New York Times

In a sign of how far the telecommunications industry's troubles have extended past the Silicon Valley, more than 10,000 Dallas area high-tech workers have lost their jobs this year.

RICHARDSON, Tex., Aug. 3 — Early last year, with the Dallas area unemployment rate hovering at about 3 percent, companies in the Telecom Corridor here in the northern suburbs were so frantic to lure talent that one of them asked whether it could pay professors at the University of Texas at Dallas $5,000 for each recruit, said the school's engineering and computer science dean, William P. Osborne. "I said: `It's a free country. I can't stop you from doing that, but I'm absolutely opposed.' "

But now, pink slips are being handed out like last year's signing bonuses. With the severe downturn in telecommunications that began late last year, the flow of cash from investors and orders from customers has ceased, throwing out of work thousands of prosperous employees who had never likened their job security to working at a dot-com. The local unemployment rate in June stood at 4.2 percent, still moderate but up 50 percent, from 2.8 percent, in six months, according to the Federal Reserve Bank of Dallas.

Compared with the rest of Texas, Dallas has always had a fairly diversified economy, with plenty of jobs in financial services, real estate, transportation, retail and energy. In recent years, the region has also capitalized on the nation's technology boom, establishing in Richardson a niche for designing, building and selling telecommunications gear.

Since the end of last year, however, more than 10,000 Dallas-area high-technology employees have lost their jobs, industry officials say, most of them in and around Richardson at companies including Nortel Networks, Alcatel and Ericsson. The region's experience illustrates how the carnage from the collapse of the corporate spending-and-investment binge, led by technology, has spread far beyond places like Austin and Silicon Valley.

Today's unemployment report indicated that across the nation, corporations continued to cut their payrolls in July, although the unemployment rate was steady. Economists are debating whether the continuing cutbacks in corporate spending, especially on technology, will leave the economy at a standstill, or worse.

The economic reversal has been especially abrupt for victims like Denny Buck, 50, who made a six- figure salary working at Alcatel, the French telecommunications giant, which has announced about 1,400 layoffs here in the last four months. Mr. Buck fears he might have to sell his house if he does not find work. He has some optimism, but he notes there are now thousands of similarly skilled people in his predicament. "It doesn't help to have all those people battling for the same jobs," he said.

Fiona Sigalla, an economist with the Federal Reserve Bank of Dallas, confirms that Mr. Buck is not alone. "High tech in general — but telecom in particular — provided a tremendous positive stimulus for economic growth here during the last five years," she said. But with the telecommunications bust, "we've gone from having an industry hiring rapidly and building lots of space to an industry contracting and laying off large numbers of people."

In Texas, as in much of the country, technology has become an increasingly important part of the economy. In the state's electrical and electronic equipment industries, total industrial production has soared 125 percent since 1987, according to the Dallas Fed. By comparison, oil and gas extraction experienced only a 4.9 percent gain over the same period.

The telecommunications industry's sharp downturn helps explain the rise in the nation's unemployment rate over the last year, from 3.9 percent in October to 4.5 percent last month. Across Texas, the June unemployment rate stood at 4.6 percent, according to the Dallas Fed, up from 3.7 percent at year-end.

As one of the nation's more rapidly growing areas, Dallas is likely to continue to outperform much of the nation, economists say. "Dallas is large enough and diverse enough to withstand this, particularly if this is temporary, and we think it will be," said Ray Perryman, head of an economic consulting firm in Waco, halfway between Austin and Dallas.

He predicts the region's economic output will grow 3.5 percent annually over the next few years while employment grows at slightly more than 2 percent, aided by gains in businesses including those that support aviation and international trade. That growth is "well below the last couple of years, but a lot of cities would love to have it," Mr. Perryman said.

But in addition to the layoffs, there are other clear signs of the industry's retrenchment affecting the region. Office vacancy rates in Richardson and neighboring Plano have more than doubled in the last year, to 14 percent from 6 percent, according to Tracy Fults, an executive director in the Dallas office of Kennedy-Wilson International, a real estate firm.

Tenants in the two cities have vacated about 580,000 square feet of office space, the rough equivalent of a 30-story office building, since the beginning of the year, and plans for another 450,000 square feet have been stalled, Mr. Fults said.

Last year, for example, Cisco Systems announced plans for a seven- building campus in Richardson. But the company recently scaled back those plans, putting two of the buildings on hold, and said it would build, but not occupy, one of the others.

Similarly, venture capital investment in Dallas has plunged, in line with a nationwide pattern. In the second quarter, Dallas companies received $176 million in venture capital investment in 17 deals, according to VentureWire, a New York firm that tracks venture capital investment. In the period last year, Dallas companies got $469 million in 37 deals.

The Dallas area's emergence as a telecommunications center goes back to the early 1980's. Richardson was uniquely prepared to capitalize on the breakup of American Telephone and Telegraph. It boasted not only Texas Instruments, which remains one of the largest employers, but also Collins Radio, then a division of Rockwell International, which specialized in military telecommunications and was one of the few companies that had technological sophistication to rival AT&T's.

Civic and business leaders had also worked to establish a new branch of the state university system, the University of Texas at Dallas, to train technology workers. Situated in Richardson, the university is now one of the largest producers of computer science graduates. In all, more than 600 technology companies are within five miles of the school, employing more than 80,000 workers.

But their rapid growth ended abruptly last year, as the flow of capital from Wall Street ceased while large companies curtailed spending on telecommunications equipment. Some customers pushed large amounts of inventory back to their suppliers.

"The basic problem was manufacturers were building and service providers were buying and installing on forecasts for demand that just could not go on forever," said Dean Osborne, who believes an industry rebound could be a year or more away. "You won't see the telecom industry have this bad a downturn again in our lifetime."

One of the region's business leaders, however, said that the impact of the cutbacks might be overstated because as many as 40 percent of those who have been laid off have found new jobs in the industry.

"There is a perception in the tech world that nobody is hiring, but I don't think that's true here," said Ron Robinson, who as president of the Technology Business Council, a trade group in Richardson, has played a large role in luring new employers. In particular, many small companies are hiring, he said.

But at after-work retreats like Nedley's, a bar and restaurant here, farewell gatherings have replaced the celebrations of a year or two ago for co-workers who had landed jobs with promising start-ups.

Employees who are stunned to find they have lost their jobs often want to go out for drinks with their colleagues, said Ned Gilblom, the restaurant's owner. "If they just drop the bomb on them," he said, "they say, `We need to go to a bar.' " His lunch business, he added, is off 30 percent.

Many of those laid off this year have been socked with another setback as the value of their past compensation — much of it based on shares of company stock, including 401(k)'s — has plunged. "I know friends who have lost millions; it's awful," said Stephanie Schweizer, 36, who was laid off by Nortel Networks in April after six years with the company and has yet to find another job. Shares of Nortel, which closed Friday at $8.04, have fallen 90 percent in the last year.

Until recently, Ms. Schweizer said she had considered her job secure. "I never thought telecom was going to go away," she said. "We were a family. We were just soaring. Everyone was making their numbers. It was just such a positive place to work."

Recently, she ran into a former co- worker who had taken a job selling women's clothes at a local mall. "It's really sad to see someone basically be reduced to working as if they had never gotten a college degree," she said. "It's like a death. Every day, I'm talking to people about who is on the chopping block next."

LINK

-- Anonymous, August 05, 2001

Answers

WHAT A CROCK OF SHIT. NYC "SELF SERVING" AT THE NY T.'S WORST. MEANWHILE, HOMES AND COMMERCIAL R.E. ARE 1/2 THE COST OF MOST MAJOR US CITIES. 4/3/2 IN GOOD AREAS AVG: $137. B OFFICE $20 VS. 40 IN NYC AND 50 IN BOSTON. WE HEAR THAT SAN FRANCISCO THE "GOLDEN CITY" HAS A REALLY BIG PROBLEM BUT ONE OF MY FRIENDS JUST GOT 7 OFFERS OVER A $1.1 MILLION ASKING. THE ONLY SERIOUS PROBLEMS WE HAVE HERE ARE IN THE AMOUNT OF TRAFFIC ON ALL MAJOR STREETS AND EXPRESSWAYS. WE ARE STILL GROWING BUT THE NUMBER OF 'OUT OF STATE" CAR LICENSES HAS INCREASED. THAT IS A SURE INDICATION THAT PEOPLE ARE IN DFW LOOKING FOR JOBS WHICH WE STILL HAVE. THE "IMPACTED" TELECOM WAS FROM OVEREXPANSION. SO INSTEAD OF GROWING AT 100% THIS YEAR THEY WILL ONLY DO 30%. THE INVENTORY GLUT IN ELECTRONICS IS BEING ABSORBED AND YOU WILL BUY 256megs OF dRAM WITH YOUR NEW BOX FOR WIN-XP LATER THIS YEAR.

THE MALLS ARE PACKED WITH SHOPPERS. A NEW ONE CALLED "THE SHOPS OF WILLOW BEND" WAS JAMMED LAST WEEKEND ON THE OPENING. DFW RATES "SHOPPING" AS THE NUMBER ONE TOURIST ATTRACTION. 12% OF TOURIST LIST IT AS THEIR NUMBER ONE REASON TO VISIT DALLAS, THE MOUNT OLYMPUS OF "SHOPPING". ALL THAT HAPPENS IN A MINOR CUTBACK LIKE THIS IS THAT THE OWNERS OF REAL ESTATE AND THE CORPORATIONS MAKE A LITTLE LESS MONEY. THE DOWNSTROKE ALSO IS SEEING AN UPSTROKE IN "OLD LINE" COMPANIES FROM OIL, TO TRANSPORTATION TO WAREHOUSING AND MANUFACTURING. BORING BUT THEY PAY THEIR BILLS. SAME FOR THE COLLECTION OF RESTAURANT COMPANIES HERE LIKE CARLSON AND BRINKER. WE ARE STILL AT UNDER 5% UNEMPLOYMENT AND......WE BUILT OVER 8 MILLION SQ. FT. OF OFFICE SPACE AND ONLY 1.9 STANDS VACANT. TELECOM HAS BEEN CRUSHED THANKS TO CISCO WHICH STARTED 2 BUILDINGS THAT WON'T BE FINISHED AND RICHARDSON NEEDS SOME NEW COMPANIES. I ESTIMATE THE 14% WILL BE REDUCED TO THE NORMAL 6-9% BY MID-2002. LAND LORDS ARE STILL MAKING MONEY. SW BELL IS DOING WELL AND EXPANDING AS ARE *ALL OLD LINE COMPANIES*. NY TIMES PROPAGANDA TO PREVENT JOB LOSSES TO DFW BECAUSE WE ARE COMPETITIVE. OPPEL Jr. USED TO WORK FOR THE DALLAS MORNING NEWS AND HIS FATHER WAS A REPORTER ALSO. NOW HE SHILLS FOR "THE PAPER OF RECORD". MEANWHILE: http://www.dallasnews.com/business/stories/438360_giving_08bus.A.html In slow economy, corporations are still giving to charities

08/08/2001

By Patricia V. Rivera / The Dallas Morning News

Betty Vanderwoude felt the fallout of shrinking stock wealth in January when donations for the Dallas Area Red Cross fell far below usual expectations for that time of the year. Overexpenditures in local relief efforts placed the nonprofit at $500,000 below budget, and the prospects of large contributions looked dismal.

"In January, we were very concerned about what the numbers would look like at the end of the [fiscal] year that ended in June. There was so much talk about the decline of the stock market and the soft economy that we just didn't know what to expect," said Ms. Vanderwoude, director of development for the Dallas Area Red Cross.

What she has found is that despite job losses and budget cuts, corporations have upheld their financial commitments. The organization, which gets 40 percent of its gifts from businesses, raised $1.7 million – or 105 percent of its goal.

Early indicators show that 2001 corporate philanthropy is steady nationwide. Charitable organizations say businesses' growing emphasis on community involvement seems to be safeguarding corporate giving.


Despite economic losses and job cuts, corporations are still giving to charities
Giving USA

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"Maybe 10 years ago, it would have been the first thing cut because it was really more about writing a big check," said Cheryl Kiser, director of marketing at the Center for Corporate Citizenship based at Boston College. "Philanthropy has become so much more visible and strategic that pulling back would have a huge public perception change on the organization."

In a survey released in July by the Chronicle of Philanthropy, 60 percent of corporations reported donating about the same as in 2000. Contributions are expected to increase by 4.1 percent this year, the publication reported.

This follows several years during which the top 400 charities experienced double-digit gains in giving. Corporate contributions increased 12.1 percent in 2000 to $10.86 billion and 13 percent in 1999.

Good will aside, contributions have also remained stable this year as a result of increased perseverance and determination on the part of nonprofit leaders.

Ms. Vanderwoude said the Red Cross sought new donors and worked extra hours to make up the difference.

"Nonprofits operate just like the corporate world – if they think there will be significant drops in the quarterly reports, they start maneuvering to take care of these type of things," she said.

Anxiety about future

Still, many worry that donations may eventually drop as business leaders continue to tighten their belts.

"We're keeping pace with last year, but it will be interesting to see what will happen in the fourth quarter," said Michelle D. Monse, associate director of the Dallas Foundation, the oldest community foundation in Texas. "Many people are in the habit of making donation decisions at that time."

Ms. Kiser of the Center for Corporate Citizenship said the corporate giving trend has yet to play out. "We wouldn't see a slowdown now since many of the budgets were set two years ago. The changes may come in the next year to 18 months," she said.

Ms. Kiser noted that already, fewer companies are attending training seminars sponsored by the Center for Corporate Citizenship.

Small groups struggle

Large organizations with strong corporate ties are more insulated from drastic changes in contributions, charities say. United Way of Metropolitan Dallas, for instance, raised its goal for 2001 by 11 percent over last year to $55 million.

It's the smaller groups that may struggle to collect what they have in past years. Corporations are more likely to avoid occasional sponsorships with groups they have little interaction with, Ms. Kiser said.

"I'm detecting a cautiousness about corporate giving," said Liz Flores-Velasquez, executive director of the Greater Dallas Community Relations Commission.

She had hoped to raise at least $75,000 by the beginning of the summer for the commission's annual November luncheon, which recognizes an individual who has improved race relations and has promoted multicultural understanding. So far, she's collected $30,000.

"I don't know that we'll make it. I'm really starting to worry," she said.

Practical Parenting Education of Plano maintained its budget of about $229,000 by participating in additional fund-raising events.

"We've felt a lot more stress and financial pressure this year than in the past," said Linda Johnston, executive director of the group designed to provide a support network for low-income parents.

For most charitable groups, however, fluctuations in corporate donations have little impact. Corporate giving accounted for 5.3 percent of the $203 billion collected in 2000, according to Giving USA.

"I'd be more worried if we saw a reduction in state and federal money," said John Hurst, director of the C.I.T.Y. Youth Shelter in Plano.

Effect on volunteerism

Where businesses have made a difference is in their long-term relationships with charitable groups.

Corporations are more involved in their communities than in past years, and it goes beyond financial contributions. Many are also encouraging – and paying – their employees to make a difference through volunteer work.

Verizon Communications, which announced in February that it would eliminate 10,000 jobs, created a cyberfoundation to ensure the future of community relations.

Verizon Foundation is giving $70 million this year. Because it's online, the foundation operations are very cost-effective, said Verizon media relations director Bobbi Henessy.

In addition, Verizon employees who donate more than 50 hours each calendar year receive a $500 grant in the name of their favorite nonprofit group.

Financial services firm Andersen released its 50 summer interns for an entire week so they could give their time to designated groups.

"We have an expectation that all of us participate in the areas of the community that we feel are important, regardless of whether the economy is good or bad," said Scott Wilson, human resources director for Andersen's Southwest region.

But Robert K. Goodwin, president of the Points of Light Foundation, said he's concerned that perceptions about the worsening economy might negatively affect volunteer work.

"People are hearing about industrywide downturns, thus causing them to be anxious when that downturn is going to affect them.

"That general angst could cause mainline employees to worry if volunteering can be justified when, in fact, they may be under impression that all their time may be necessary to fulfill bottom line expectations," he said.

The bottom line

The Center for Corporate Citizenship and the American Productivity & Quality Center have studied how helping the community can benefit the bottom line.

"Innovative community relations strategies help organizations build corporate reputation, support customer acquisition, and create new market and product development," said Steve Rochlin, director of research and policy development at the Center for Corporate Citizenship.

Now he's working on ways to measure the effects of corporate charitable contributions on reputation, financial performance and relationships with employees.

Businesses have already bought into the benefits of volunteerism.

A Points of Light Foundation survey found in 1998 that 81 percent of companies intentionally linked employee involvement in volunteer programs to their overall business strategies, compared with only 31 percent in 1992.

"Respondents to the survey unanimously agreed that corporate volunteering helps create healthier communities and improves a company's public image; 97 percent say these programs improve employee teamwork," according to a summary of the study.

Mr. Goodwin of the Points of Light Foundation said the nation has gone through a decade of emphasis on the benefits of volunteerism and philanthropy.

"So much so that now more and more people, including those in the workplace, understand that service and charity is not simply nice, it is necessary," he said.



-- Anonymous, August 08, 2001

NYC NEEDS TO BRIBE PEOPLE TO TAKE OFFICE SPACE !!!!!
BUT THEN THAT IS A NYC "TRADITION" !!!!


http://www.dallasnews.com/business/stories/437584_mbBRITE_07bus.html
Wednesday | August 8, 2001

DallasNews.com: BusinessContact us
Landlords hope offers help fill offices

08/07/2001

From Wire Reports

NEW YORK – Cushman & Wakefield is offering two tickets each to the Super Bowl, a World Series game, a Stanley Cup Finals game and an NBA Finals game to the broker who fills the top floor of New York's Equitable Building.

The package, which includes round-trip airfare and hotel accommodations, is among the incentives landlords and brokerage firms are dangling to brokers to fill space after U.S. office vacancies jumped to 10.8 percent in the second quarter, the highest level in four years.

Other incentives include Porsche Boxster convertibles and South Pacific vacations.



-- Anonymous, August 08, 2001


Cpr, I almost get this feeling you think the New York Times was deliberately trying to hurt Dallas' reputation in order to make New York City look better...

-- Anonymous, August 09, 2001

This ought to pop a CPR vein....a Forth Worth based enterprise has gone under, what a shame.

Feds Arrest 100 for Child Porn

-- Anonymous, August 09, 2001


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