Downsizing of Companies Brings Suffering to Company Towns : Recession: Nearly everyone in a city of 35,000 is affected by Phillips Petroleum’s laying off 1,000 workers.

BARTLESVILLE, Okla. —  When Phillips Petroleum decided late last year it needed to become leaner, anxiety spread among the 5,200 workers here who wondered if their jobs were in jeopardy.

The company was cutting 900 jobs at headquarters and 100 contract jobs in Bartlesville. But tension spread far beyond those workers, to people throughout this city of 35,000, where nearly everyone has some connection to Phillips and will feel the sting of layoffs.

“A lot of people eat, drink, sleep and have a good time here because of Phillips’ payroll,” says Bill Creel, president of the Chamber of Commerce, whose father worked for Phillips 70 years ago. “It’s going to hurt. Absolutely, no question. It hurts.”

Terrel Taylor, who owns a home-building company, says he last sold a house in July, about the time rumors began circulating about the Phillips layoffs.

“We’ve had lots of interest in these houses, but people won’t make a decision,” says Taylor, whose sister-in-law works for Phillips. “First of all they want to know if they have a job. And if they’re not connected with Phillips, they want to see if the market collapses.”

Bartlesville is a “Phillips town,” one of hundreds of towns across the country that rely on a single company for most of their jobs.

Merchants thrive when business is booming but, as one downtown jeweler explains, “For every pleasure there is a pain.”

“When economic time turns bad and the company suffers, everybody is going to suffer,” says Josef Derryberry, who has owned Josef Derryberry & Co. jewelers for 32 years. “When something happens to Phillips, the effect it has on the community is about as devastating as something can happen without wiping it out.”

Brothers L.E. and Frank Phillips set up a barbershop here before they hit pay dirt in the oil fields and founded Phillips Petroleum in 1917.

Today the company dominates the skyline above these northern Oklahoma plains: the 19-story Phillips building, another office building 15 stories high, a third 12-story Phillips building.

There’s also a research center west of town not far from Woolaroc park, where buffalo roam near a lodge at which Frank Phillips and Will Rogers once held nighttime talks under starry skies.

Phillips is now the nation’s 11th-largest oil company with annual revenue near $14 billion. More important to Bartlesville, its annual payroll is $214 million, money that’s spent in such places as Dink’s barbecue restaurant and the Git-n-Split convenience store on Frank Phillips Boulevard.

So when the company announced in November that it had hired a consulting company to help identify and eliminate unnecessary jobs, Bartlesville braced for the worst.

“The rumors were the worst part,” Taylor says. “I was hearing numbers as high as 2,500. That doesn’t help things a bit.”

Speculative home-building virtually stopped and big-ticket sales slowed. Creel tells of a friend who postponed buying an expensive piece of machinery.

The First Baptist Church opened a room for prayer during lunch hour, and the Washington County Mental Health Assn. bought 500 workbooks designed to help children understand why mom or dad would be losing their jobs.

Derryberry says the holiday spirit went up in smoke.

“It was the worst emotional state I have ever witnessed here,” he says.

When the cuts were finally announced in late March, some were laid off immediately. A few will stay until June.

They will get three weeks’ pay per year of employment. The company is also offering free help with resumes, some money for college and six months of medical benefits.

J. Bryan Whitworth, vice president of corporate relations, said at an April 3 forum that the layoff process was stressful for workers at headquarters, but he was confident Phillips would be able to pick up the pieces.

For the rest of the city, it’s a matter of where the chips will fall.

City Manager Bob Metzinger is working on next year’s budget and preparing for a shortfall in revenue, though he won’t estimate how much. “It certainly will be conservative,” he says.

Creel says the layoffs will hurt the retail merchants, plumbers, “all sorts of people that keep a production worker going.”

“They’ll actually suffer more” than the laid-off workers, he says. “Generally they’re not making as much money. They won’t have the severance pay, they won’t have any medical coverage, and nobody helps them find a job or write a resume.”

Company spokesman Jere Smith doesn’t expect to know for at least another month how many will take early retirement, and possibly stay and still spend money here.

Nor does he know if they can find work nearby.

That leaves the community in limbo.

“People between the ages of 35 and 54 consume the most goods. If we lose them, it hurts,” says Ken Byers, owner of Ken’s Color TV Center, whose daughter lost her Phillips job two months ago.

Mike Jackson, president of the Bartlesville Assn. of Realtors, anticipates that as many as half the layoff victims will try to sell their homes.

Derryberry says sales at his jewelry store were down 25% in February and 30% in March. He is hoping that by July people will feel safer about spending and business will pick up.

Phillips and Bartlesville have been through this routine before, only worse. The company laid off 1,111 workers in 1986 after takeover attempts by Carl Icahn and T. Boone Pickens.

But the country wasn’t in recession then. And this time around, Phillips says the cuts are permanent.

“We are going to stay lean once we get there because the functions are going away,” Smith says. “In the past we were laying off people and not functions. We’re trying to prevent that.”

Most businesses are doing their best to remain optimistic. As one hardware store owner puts it, they have no choice.

“I’ve got better things to do than worry about this,” says Phil Sontag, who took over John’s True Value Hardware Store after the 1986 layoffs. “We’re busy now. In the summer months when things slow down, I’m sure we can attribute some of that to the layoffs, but you’ve just got to conform your business to the changes.”