Strib to cut 3 percent of workforce

Another week, another round of bloodletting at the Strib.

This morning, Strib publisher, chairman and part-owner Chris Harte told his staff that 58 positions across the company, or about 3 percent of the workforce, will be cut. According to Harte, three-quarters are in circulation, where independent contractors and technology will replace employees.

None of the 58 will be in the newsroom, according to sources. Separately, management has notified the Newspaper Guild that up to seven employees – most likely four to six – in photo finishing will be replaced by automated equipment, as first reported by Paul Demko in City Pages. In a memo to Strib workers, Guild co-chairs Dave Chanen and Graydon Royce said the equipment “gets low marks for quality.” The union must get 90 days notice of layoffs due to technology.

In staff meetings with employees in recent weeks, Strib editor Nancy Barnes had expressed optimism that impending cuts would largely spare the newsroom, according to reporters who attended the briefings. Harte also announced senior executive and nonunion salaries have been frozen; union pay is governed by a contract that expires this summer.

Though the workers in the current round of cuts will be laid off, Harte writes that they will be given buyout packages similar to those reporters and other workers accepted last year.

Meanwhile, the union is getting to know Restructuring Associates (RAI), the mediator/facilitator hired by Harte as the Strib’s revenue drops and contract negotiations loom. In an update to members, union steward Pam Miller wrote that RAI officials “said some things we liked — for instance, that they’re not here to facilitate layoffs and staff cuts and that they recognize the damage that the departed Par Ridder and such expensive failed plans as the redesign did here. They seem intelligent and fair, and so Guild leaders said they’re willing to be part of at least the first set of talks in a long process during which any player can drop out at any time.

“… However, we are proceeding cautiously, because many things are nebulous, including this one: How would this process affect bargaining? RAI said that these talks would not generally deal with contractual items, but that if they did, those issues would be ‘thrown over the fence’ to the bargaining committee. As you might imagine, we’re wary of that, because it’s not clear what it means. We’re also not pleased that the initial meeting included no mention of the land-sale venture disclosed two days later, or of the company’s plan to lay off our [photo-finishing] members, announced this week. But for now, we’re willing to talk, if we can truly be participants in change, innovation and growth.”

Here’s Harte’s memo:

In my note to you a couple of weeks ago, I tried to give you a realistic picture of the state of our business. While we are a very strong and profitable company and by far the leading media organization in the Twin Cities, we are currently battling persistent revenue declines, as are most media companies. We have continued to analyze possible expense reductions in each area of the company to deal with our revenue gap and to make us more efficient going forward. We have now settled on several actions that we will be taking over the next few weeks, and I hope it’s clear that these steps are designed to keep us strong for the future.

We recognize that this follows a year of aggressive cost-cutting, including a significant workforce reduction mostly through voluntary separation programs announced last May. At the time, we thought these steps would be sufficient to stabilize the business, but our advertising revenue projections were too optimistic. Since then, the national and state economies have further weakened, and our key classified markets-real estate, automotive and employment — have fared even worse than the overall economy.

Because of this, I am announcing some incredibly difficult decisions that come only after searching unsuccessfully for less painful alternatives.

First, I am announcing a wage freeze for all independent employees. Normally, we would be giving wage increases in the March/April time frame to eligible independent employees. We have not yet determined how long the freeze will be in effect. To a great degree, that will depend upon when our revenue starts to rebound. (Meanwhile, we will do our Performance Evaluation Assessments (PEAs) without the wage increase component.)

Salaries of senior executives — my direct reports and me — were frozen last month. Union wages are determined by individual union contracts, and we have just begun a process with Restructuring Associates (RAI), our consulting firm, to explain our situation to all our unions and seek their cooperation in addressing our significant business issues.

My second announcement is even more painful than the first. Today we will notify impacted employees of the elimination of 58 positions across the company. This is about 3 percent of our total workforce. These will be involuntary terminations, not a voluntary separation program, but those who are terminated will be offered the identical severance benefits as were offered to those who took buyouts last year.

About three-fourths of the involuntary terminations are in the Circulation Department, where we have recently made substantial changes to our operation through the introduction of new technology, streamlining of single-copy distribution processes and conversion to independent agents for management of home delivery. Smaller numbers of terminations are coming from around the company.

The third set of actions will be further cuts to our non-labor expense budget. As you know, wages and benefits are more than half of every dollar we spend on operations, and newsprint is roughly another 18 percent, leaving only about 25 percent of our cash expenditures for everything else. Despite the large cuts we have already made, I have asked our senior executives to do their best to find more reductions so that we can minimize the need for further job eliminations. Specific plans are underway or under study in every department, and we are implementing reductions whenever and wherever we can prudently do so.

Going forward, every department has been asked to continue looking at all possible solutions to become a more efficient company, including new technology and outsourcing of functions that are not core competencies to our business.

As we are taking these actions, I want be clear that the cuts we are announcing today have nothing to do with the Restructuring Associates project, which is just beginning. The RAI consultants are working with our managers to prepare a presentation on the state of our company, designed to give all our employees a better sense of what we are up against. I realize we are making some far-reaching decisions without everyone fully understanding why we must take these steps.

But we are working as fast as possible to close this information gap. If you have gone to RAI’s website, you know that shared understanding and collaborative problem-solving is fundamental to their approach. Our hope is that in the next couple of months we will have conducted sessions throughout the company that explain our situation in much more detail.

I also want to emphasize that while we are cutting in some places, we are investing in others as we adjust our course to stay competitive in this rapidly changing media environment.

We fully realize that our success as a company depends upon all employees understanding what our direction is and why, and in the weeks and months to come we will provide you with the information you need to help us get to the right solutions for our long-term and mutual success.

Comments (2)

  1. Anonymous Submitted by Anonymous on 02/11/2008 - 05:55 pm.

    Maybe if the Star would be a bit more balanced, the conservatives would visti their advertisers. It is tough to make money when you insult 1/2 the target population. I guess they must believe in their current business model though.

    It seems that MinnPost has the same business model. I hope you guys don’t get sued for taking it with you. There is a guy named Ridder that can help you follow it.

  2. Submitted by John Olson on 02/11/2008 - 12:49 pm.

    I suspect the decisions that are now being described as “incredibly difficult” are not going to be any easier.

    The zillion dollar question that seems to be creeping in to all of this ongoing bad news for the Strib is this: at what point do to future cuts reach a point where the sheer viability of the Strib as a newspaper get called into question?

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