Micron tightens its belt through attrition-CEO: Company will hire when economy rebounds

Micron Technology is operating leaner than ever, using attrition to thin its ranks and avoid layoffs, company executives acknowledged in recent days.

Julie Howard
The Idaho Statesman

The company lost 3,000 employees — or 15 percent of its global work force — over a two-year period, though it gained back nearly as many employees as it lost through acquisitions and hiring for key positions.

The company has more than half of its 18,700 employees worldwide based at its Southeast Boise headquarters.

Micron Chairman and CEO Steve Appleton said using attrition — meaning those who retired, quit voluntarily, or were fired — is a strategic way to cut costs.

The company will need to hire more employees when the economy rebounds, he said.

“Boise´s definitely down,” Appleton said. “It´s part of a concerted effort to conserve on costs.”

That disclosure marked the first time Micron executives have talked about reductions during this economic downturn.

“As we´ve lost people, we haven´t replaced them,” he said after a conference in Sun Valley last week where he disclosed work-force reduction numbers to analysts.

The work-force reduction is “all attrition,” Appleton said.

A Micron spokesman said the net loss of jobs at the Boise facility through attrition has been negligible because of new initiatives the semiconductor company started during the same period.

In January 2001, Micron had 10,500 workers at its Southeast Boise headquarters and reports having the same head count today.

The difference is that since January 2001, the firm has built and staffed a new research and development facility, a new lab facility and a photomask plant, hiring in those areas as attrition reduced workers in other areas. The same number of workers, therefore, are being used in a much larger operation.

A company spokesman said employees have been shifted among positions to accommodate needs. He acknowledged that many people have left jobs at the Boise plant, and the company has left many of those jobs unfilled, at times hiring new people for newly opened spots.

“We´re doing what we can to avoid layoffs,” spokesman Sean Mahoney said.

The impact on the area economy is a “what if” scenario. In normal conditions, economists said, Micron would have replaced the old positions and also hired for the new positions, adding more jobs to the market.

Instead, the company´s employment remained stable in the midst of a technology downturn that led to widespread layoffs throughout the industry.

“Some lose jobs, others gain,” said John Church, president of Idaho Economics, about Micron´s strategy. “In the macro-economic scheme of things, there´s probably not much effect if it´s been a true trade-off thing.”

Last week, Appleton said a higher level of responsibility has been required of employees through the downturn.

“We have been implementing a much more accountable performance management system,” Appleton told analysts in Sun Valley.

Church said companies commonly enforce stricter guidelines during economic downturns, using those times to shake out the organizations´ weak links.

“It happens across all companies when times get bad,” he said. “The hair trigger could be much closer today, where they´re releasing a lot of people that might have slid by in better times.”

Micron officials declined to break out how many workers left voluntarily versus how many were fired over the past two years.

Micron hasn´t experienced a significant net decline in employees because of acquisitions during the past 18 months that added back more than 1,000 workers.

The firm acquired a large facility in Virginia and the assets of two chip design firms in California.

The new facilities in Boise also have added jobs back into the local campus.

The company also has invested in its engineering ranks, bolstering those employment numbers by 28 percent during the same two-year time frame. Micron currently has more than 4,000 engineers. The company declined to say how many work in Boise, but Boise is home to Micron´s headquarters and the firm´s research and development facility.

The company will add to its employee ranks when the economy is better, Appleton said.

“When the markets start expanding, we will need more people,” he said.

Micron is one of the few technology companies that has not resorted to layoffs to cut costs during the past two years.

That´s the case partly because labor costs are minor compared to huge equipment costs and general overhead, according to Micron reports. As the company moves to more advanced technologies, equipment costs become an even greater factor.

Micron officials have said they must continually invest in newer technologies in order to be competitive. But that doesn´t mean it hasn´t targeted employee costs to save money.

In 2001, it implemented a hiring freeze and cut the pay of its top executives by 20 percent, while giving 10 percent pay cuts to all other workers earning more than $60,000 a year.

In October of that year, Appleton stopped collecting his $800,000 annual salary, saying he wouldn´t take another paycheck until Micron again posted a profit.

In early 2002, during a period when the company was doing better — although still showing losses — the 10 percent pay cut was restored for those workers making $60,000 or more. The hiring freeze was partially lifted, although the company has been cautious in its hires, only filling critical positions. Pay cuts to top executives and Appleton´s voluntary rejection of his salary are ongoing.

Like others in the memory chip industry, Micron has been hurt by the pullback in technology spending. Micron´s chips are primarily sold for personal computers, but also go in everything from digital cameras to cell phones.

Micron´s cash reserves have shrunk by 60 percent during the past year, resulting in the company raising $500 million in capital from institutional investors on Wednesday.

Executives said the cash would be used to shore up the firm´s cash reserves and also for operating capital through the year.

While the firm´s stock traded up more than 6 percent on that news Wednesday, it closed down 10 cents in heavy trading, at $8.32 on Thursday.

To offer story ideas or comments, contact Julie Howard
[email protected] or 373-6618

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