Economy

Sprint Nextel to cut as many as 2,500 more jobs

Saying the company can't cut costs fast enough to offset revenue declines, Sprint Nextel chief executive Dan Hesse announced plans to eliminate 2,000 to 2,500 jobs nationwide.

Most of the job cuts — expected to save about $350 million in labor costs — will take place by Dec. 31, Hesse said in a memo sent Monday to employees.

It will be the second mass layoff from the company this year and will represent up to 6 percent of its work force.

In January, Sprint said it would cut 8,000 jobs, including about 2,000 in the Kansas City area. That downsizing eliminated 14 percent of its work force in an effort to save about $1.2 billion this year.

The company was unable to specify how many jobs will be lost in this round of cuts among the 7,300 currently employed in the Kansas City area. Most of those employees work at Sprint's headquarters in Overland Park.

As one of the area's largest private-sector employers, Sprint’s cuts are a highly visible indicator of the still suffering job market.

American Airlines last month announced it will close the longstanding aircraft overhaul base at Kansas City International Airport. The base shutdown, scheduled for September 2010, will eliminate about 500 jobs.

Fortunately for the area's economy, the auto industry has provided a counterpoint to the overall job losses and a local unemployment rate hovering at 9 percent.

The General Motors Fairfax assembly plant has added about 950 jobs, and the Ford Motor plant in Claycomo has held employment steady.

But the loss of more Sprint jobs is especially hurtful to the local economy. They generally are well-paying positions, noted Doug Davison, economist with CERI in Johnson County.

And, added Frank Lenk, economist at the Mid-America Regional Council, Sprint and the telecom industry in general "provide jobs that we do for the rest of the country — they bring dollars in — and as an export industry they have a larger impact."

In his e-mail memo to employees, Hesse said, "We improved our subscriber performance this past quarter," but the gains didn't offset sales losses sustained over the past year.

"We must have a cost structure that ensures we can continue to generate enough cash to continue running a competitive business and remain financially sound," the three-paragraph note said.

"If we continue to make progress, perhaps this will be the last reduction for some time," Hesse wrote.

The company has about 42,000 employees systemwide, said company spokeswoman Melinda Tiemeyer.

Two years ago, it had 64,500, with 14,500 in the Kansas City area.

Read more at KansasCity.com

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