ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, February 1, 1996 TAG: 9602010090
SECTION: EDITORIAL PAGE: A-11 EDITION: METRO
SOURCE: E. THOMAS GARMAN
AT&T'S decision to eliminate 40,000 jobs is the latest evidence of the fierce competition in the telecommunications industry. While reorganizing into three separate companies, AT&T will reduce its staff from approximately 300,000 to 252,000 - with 60 percent of the cuts involving white-collar workers, most in supervisory positions.
For those who have been following the contract negotiations between Bell Atlantic and the Communication Workers of America, this news is disconcerting. While negotiators went back and forth over wages, benefits and outsourcing, one of Bell Atlantic's new competitors cuts 40,000 jobs. These are family-wage, high-skill, service-sector jobs - the kind we've been told are the foundation of the ``information age.''
The lesson here is that in a highly competitive industry like telecommunications, companies must rapidly adapt. Old business structures and staffing patterns need to be re-examined. Twenty years ago, telephone companies could negotiate pay raises and other benefits for employees, knowing that these could be passed on directly to customers without sacrificing an acceptable rate of return to stockholders.
Today, there are no such guarantees. Companies formerly governed by rate-of-return regulation now face various forms of ``incentive'' regulation. They can earn greater profits if they operate successfully, but they can lose money if they don't. As a result, these companies have an incentive to cut costs, including investing in new technologies to improve worker productivity and customer service.
As Bell Atlantic and CWA conclude their negotiations, AT&T's actions suggest that the two need each other now more than ever. Their dispute was mired in the win-lose labor/management mindset of yesteryear. But today, if either loses, they both will lose. A company that doesn't have flexibility to respond quickly to market pressures will not survive.
That means bankruptcy - closing the business. The workers will lose, too. Workers who do not recognize the changes going on in their industry and respond accordingly will eventually be left behind. No amount of shrewd negotiating - on either side - can withstand the structural changes in the telecommunications industry.
For CWA, this means recognizing that absolute job security is a thing of the past. Rather than forcing management to hold on to workers they don't need, unions must work with management to make sure their members are prepared to fulfill the essential tasks of the business, even if these change every few years. Retraining and transition planning are two functions that every union should offer its members, with support from corporate management.
It also means that CWA will have to organize new units, especially in smaller start-up telecommunications companies that are contracting with the large telephone companies. Outsourcing is an unavoidable trend in most large telecommunications companies because it is a proven money-saver. Unions cannot stop it, so they must give attention to the needs of the employees in those smaller firms.
Most fundamentally, unions must begin genuinely communicating with their members about the reality of the future of their industry, and figure out how to get behind the strategic directions of their employer. CWA's public criticisms of Bell Atlantic's technology strategy hurt its members as much as they hurt Bell Atlantic - it's the company's competitors who are winning out. The CWA must catch up with '90s marketplace realities or they may not have the Bell companies around in the 21st century.
At the same time, Bell Atlantic cannot hope to maximize its employees' contributions without making substantial changes of its own. The company will need to invest heavily in training and retraining, so that it can take advantage of employees' long experience in the industry while preparing them for tomorrow's world.
The company also should establish mechanisms for input from workers about the nature of the technological changes within the company. Are these changes designed to take advantage of the strengths of workers, or to replace them? What differentiates Bell Atlantic from its competitors around the world are its work force and its technology. The company must capitalize on both if it is to succeed in the marketplace.
The best negotiations are about finding a ``win-win'' for both sides. Given AT&T's horrible downsizing actions, the CWA should know that its members' future can only be hurt if Bell Atlantic's competitiveness is undermined. Likewise, the sacrifices that Bell Atlantic's employees made to keep the phones working during the recent East Coast blizzard should remind the company that its workers are its competitive strength.
E. Thomas Garman of Newport is a professor of consumer affairs at Virginia Tech.
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