Ma Bell Disconnects 24,000 Jobs

By John S. DeMott

For decades the telephone company has been known as a place where hardly anyone ever got fired. My, how Ma Bell has changed. Last week American Telephone and Telegraph announced that between now and the end of 1986 it plans to cut its work force by 24,000, possibly the largest single sloughing in American corporate history.

The planned terminations were the result of the new era in telephone competition that began 20 months ago, when the Bell System was broken up. The old network was divided into seven regional operating companies and a smaller AT&T to compete in long-distance service and in the manufacture of computers and telecommunications equipment.

The new AT&T is composed of Bell Laboratories, the old Western Electric manufacturing arm under the name of AT&T Technologies, AT&T Communications for long distance, and AT&T Information Systems. Based in Morristown, N.J., Information Systems makes telephones and computers. Last year it had sales of about $10 billion. Atis, as it is known for short, is the leading edge of AT& T's attempt to compete with IBM and other computer companies.

The problem was that Atis lumbered into the postdivestiture period with far more employees than it would ever need. Under terms of the breakup, tens of thousands of Bell workers in maintenance, repair and installation were attached to the new division after January 1984. Thousands more were later added to the payroll: 17,000 manufacturing employees and 10,000 warehouse workers.

Last year about 11,000 people left AT&T through early retirement and layoffs. But the firm still had a heavy payroll. In April the Federal Communications Commission, which still watches over large parts of the new AT&T, finally granted the company permission to consolidate some operations. That allowed the elimination of costly duplication and led to last week's announcement.

Wall Streeters were not surprised by AT&T's ax swinging. Times have not been good for the restructured firm. The company's once captive markets have become competitive, and its share of business has been dwindling. Its slice of new consumer telephone sales, once 80%, is now down to 50%, and the company has closed its telephone-making plant in Indianapolis. Revenues from telephone rentals are shrinking fast too, as more and more phone users buy their own phones. Such competitors as GTE and Northern Telecom have stolen about half of the $12.5 billion a year in business that AT&T once did with the local operating companies. Computer sales, which have been depressed for nearly all firms, are especially bad for AT&T. Said Fritz Ringling, an analyst with Connecticut's Gartner Group: "The company put it off for as long as possible. It has to slim down to compete in a fast, new marketplace."

Still, AT&T intends to proceed carefully. It will rely on financial incentives and attrition to slim its ranks. White-collar managers and lower- level workers will in some cases be offered 60 weeks' severance pay. Others leaving voluntarily will get medical insurance for as long as six months. In deciding whom to let go, seniority will be the first consideration: last hired will be the first fired. A few, only about 2,000, may get reassigned to other jobs in the company.

Members of the Communications Workers union were not impressed. They plan a national day of protest against the firm this week. But they may have even more dismissals coming next year, when their labor contract expires. Some analysts believe AT&T will let go of as many as 30,000 more jobs during the next three years, as it breaks from its benign past and sharpens itself for a competitive future.

With reporting by Thomas McCarroll/New York