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resilience in wake of past cuts

Economic statistics show
resilience in wake of past cuts

How many Eastman Kodak Co. jobs can Rochester stand to lose?
Challenged by shrinking profits and market share, the company this week announced a drive to cut 10,000 jobs worldwide.
The impending cuts are part of a trend that has nearly halved Kodak’s local work force in less than 15 years.
After peaking at more than 60,000 in 1982, Kodak’s Rochester-area employment fell to roughly 34,000 by the end of 1996.
Conventional wisdom here says that Rochester’s economy has shaken off each round of layoffs, downsizings and restructurings by the area’s largest employer.
And by one measure, conventional wisdom would appear to be right.
Figures compiled by the Center for Governmental Research Inc. that compares Rochester-area personal income and Kodak employment levels reveal no immediately discernible correlation between the two.
Take 1986, a year in which Kodak announced local work-force reductions of 8,600 and by the company’s own count lost 8,700. Total personal income here grew by more than $1 billion from the year before.
The same scenario repeated in 1989, when Rochester lost 4,000 Kodak jobs. Personal income grew by $1.8 billion.
Over the 14 years from 1982 to 1996, which saw 26,000 Rochester-area Kodak jobs evaporate, personal income marched steadily upward. It increased in each year, and roughly doubled from $13.3 billion in 1980 to $26.7 billion last year.
In short, said CGR economist Kent Gardner, while the area’s total paycheck has been mildly impacted by Kodak job cuts, “the bottom doesn’t fall out.”
So while one might expect Rochester to tremble each time Kodak sneezes, the area’s overall economy has more followed national trends.
Michael Haymes, president of the Re/ Max Realty Group Inc., shares Gardner’s view. He said that residential real estate market trends here have followed national performance.
In the early 1980s, when home prices nationwide appreciated steadily and sales were brisk, the same was true here, he said. When national markets slowed in the late 1980s and early 1990s, so did Rochester’s.
While it has been so-far-so-good for Rochester, could the coming round of Kodak cuts be the restructuring that breaks the camel’s back?
The question is not easy to answer, Gardner said, chiefly because data on what happened to the 26,000 Kodak workers who have lost jobs since 1982 is hard to come by.
Career Development Services Inc., which has done much of Kodak’s outplacement, by agreement with Kodak does not release such numbers.
Local experts cite a variety of factors that in the past have cushioned the blow of Kodak downsizing. High on the list is a rising cadre of small high-tech ventures that have helped take up the employer-base slack.
That has been true and remains true, said Mark Rajkowski, general manager of Price Waterhouse LLP’s Technology Industry Group for Upstate New York.
Some relatively good news for laid-off Kodak techies is that high-tech workers are in short supply. Companies are actively in the market for such workers, he said.
Can that job market completely absorb the workers Kodak is likely to lay off?
Rajkowski does not think so.
Gardner believes much of the cushioning of past Kodak layoffs came from the photo giant itself.
Earlier restructurings were skewed to early retirements and buyout packages that kept a fair amount of cash in the community, he said. And some number of ex-Kodak workers used buyout money and pension-plan proceeds to finance their own business start-ups. Others went back to Kodak as contract workers and thus continued to work for the company, although they did not show up in employment totals.
Again, few hard numbers are available to determine the precise effect of such factors, Gardner said.
However, he thinks a key factor in how well Rochester responds to the coming cuts will be how Kodak handles the restructuring. Will it be as generous as it has been? Or will the company now be forced to leave exiting workers with less?
Another question is how many of those whom Kodak cuts loose will stay in the area.
The demographics of laid-off employees could change, Gardner said, skewing more toward younger workers less inclined to stay in Rochester, or at least more willing to look elsewhere. This might particularly come into play with highly skilled workers, many of whom will have little difficulty finding work with major corporations such as Hewlett-Packard Co.
If significant numbers take their jobs and future paychecks elsewhere, he said, it will certainly influence the Rochester-area economy, rippling into the real estate and retail markets.
Rochester, it seems, can take heart in its past ability to shrug off Kodak job cuts. But it might also do well to remember that past performance is no guarantee of future results.

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