Layoffs Hit Home in Rochester

ROCHESTER, N.Y. â€”  Janet Mahoney has never had to apply for a job since getting out of college 20 years ago. With high-tech positions popping up all over town, companies were wooing her.

But as one of the growing number of employees let go by fiber-optic networking company Global Crossing Ltd., which filed for bankruptcy protection in January, the 41-year-old technology executive is finding the job market much different.

Now, she’s using an executive recruitment firm to help her polish her resume, give her interviewing tips and devise a strategy to land a job. Her only requirement: She wants to stay in the family-friendly Rochester area.

That won’t be easy because Rochester also is struggling. The six-county area of 1.1 million in upstate New York is trying to maintain its status as a pocket of affluence and resiliency while it attempts to redefine itself and lessen its dependence on the region’s dominant employer, Eastman Kodak Co. It is an economy in transition as Kodak, which once accounted for 22% of the region’s payroll, has dismissed nearly two-thirds of its local work force in the last 20 years--a total of 36,000 jobs.

Kodak is cutting more this year, and Global Crossing’s Rochester operation--the company’s biggest with more than 1,300 employees a year ago--probably will take another hit after the company’s news Friday that it will cut 1,600 more workers in the coming months.

Community leaders long have boasted about Rochester’s elastic economy, which has been able to withstand several decades of battering to a hard-hit manufacturing sector stretching from Buffalo to the Adirondack Mountains. An ever-emerging stream of small, new companies consistently has picked up the slack from major layoffs at Kodak and the other giant employers, Xerox Corp. and Bausch & Lomb Inc., and increased the job ranks every year.

But last week, as a wet March snow blew in off Lake Ontario, the region felt another kind of chill: The state Labor Department’s monthly survey found that the historically low unemployment rate jumped to 6.3% in January, higher than the nation’s 5.5%, and that the area had lost 12,400 jobs in the previous 12 months.

For Rochester’s popular, dynamic mayor, William A. Johnson Jr., the news wasn’t surprising. Long warning that the elastic in the economy was getting stretched out, Johnson proclaimed that the area had reached the saturation point in its ability to absorb the thousands of jobs eliminated at the Big Three and elsewhere.

“Objectively, we only look good compared to Buffalo,� Johnson said in his annual state of the city speech last week. “From a national perspective, greater Rochester’s rates of job and population growth have ranked near the bottom of all metro areas for the past 30 years.�

Last year, Rochester’s employment numbers ranked it 249th out of 288 metropolitan areas.

For Mahoney, a single mother of a 6-year-old boy, the dire employment news means her effort to find a job in Rochester just got tougher.

“I love it here, and I don’t want to move,� says the former Global Crossing director of call-center technology.

Despite harsh winters, the area is known as a friendly, family-oriented community where neighbors don’t have fences separating their properties. With a median household income of $31,000--and high-tech pay far surpassing that--the city and surrounding Monroe County can be quite affordable. The median home price is $94,000. The region usually is the top United Way contributor per capita nationwide and has a long history of giving, fostered by the philanthropy of George Eastman and his photo equipment company.

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Global Crossing Woes Hit Hard

Mahoney, among about 300 Global Crossing employees laid off in the last year, had bought into the company’s vision of a seamless, worldwide, high-speed voice and data network that the onetime Beverly Hills company was building. That is why Global’s bankruptcy has hit Rochester’s psyche harder than the thousands of layoffs at Kodak, Xerox and Bausch & Lomb.

This, after all, wasn’t an old-line company shedding weight in the face of stiff competition. This was the promise of the future, the leading edge of a wave of telecom firms that were going to put Rochester on the map as a top communications technology center in the nation. This was the heir to Rochester Telephone Co., the longtime utility that was the safest of investments, a stock for widows and orphans.

Rochester Telephone’s parent firm, Frontier Corp., was purchased by Global Crossing in 1999.

“This was not Kodak slugging it out with Fuji,� said Rocco DiGiovanni, Monroe County’s director of planning and development. “People felt betrayed.�

Although the number of telecom firms in the area has grown 30% in two years, to 92, much of that growth came during a telecom boom that has since gone bust.

One bright spot is PaeTec Corp., a local phone service and networking provider in suburban Fairport, which will hire 15 to 20 former Global Crossing workers. PaeTec’s chairman, Arunas A. Chesonis, believes that despite the bad year Rochester has had, tech jobs will help to pull the area out of its doldrums.

Chesonis and analysts like Kent Gardner at the Center for Governmental Research, a local economic research firm, believe there is still a lot of power in the small business engines, not only at tech companies but also as biotech and the 17 colleges and universities that dot the area. Employment had grown every year in the past decade until last year, and they are sure the young firms will spur growth again.

“The real success,� Gardner says, “is that Rochester has nearly weaned itself from its [economic] dependence on Kodak.�

From its peak of 60,000 Rochester employees in 1982, Kodak now has 24,000 in the area and will likely drop below 20,000 this year, based on previously announced worldwide cuts, he said.

But changes aren’t coming fast enough.

Mahoney, who lost a $32,000 severance package when Global filed for Chapter 11 bankruptcy protection on Jan. 28, is entertaining job prospects in the Scranton, Pa., area and northern New Jersey. Many others who call themselves ex-GXers after the ticker symbol of the company’s once highflying stock, also are looking elsewhere--or looking to get out of the industry altogether.

“The job market here is completely dead, especially for networking and high-tech jobs,� says Malcolm Kirby, a former director of information technology and product development. He’s now looking at a job possibility out of state.

Rolin (Bud) Peets, who thought heading up computer security operations at Global would be part of a growing field, says there are no similar jobs for him in Rochester. Born and raised here, he and his wife don’t want to take their two children from their grandparents and the rest of their extended families. So he joined one of his brothers in the masonry business, laying bricks and stone.

“There was one job, with 20 employees who would be reporting to me, but it paid only in the mid-$40,000 range,� he said.

Even for an area with a high median income, tech jobs usually pay much more. Kodak employees average $61,000 a year, PaeTec workers $82,000. Peets said he was earning a base annual salary of $115,000 plus bonuses totaling $35,000 at Global before he was laid off at the end of June.

Mayor Johnson worries that lower-paying service jobs are replacing higher-paying manufacturing jobs, but he knows the economic problems are multifaceted. Companies are leaving town because of burdensome state and local taxes, he said, and they’re taking Rochester’s future with them. In the last decade, 41% of Rochester citizens 20 to 34 years old have left town. That has played a major part in limiting overall population growth to only 3%.

“All three of my daughters left Rochester, though one has returned,� Johnson said.

Mahoney is doing her best to stay in town. After going into a panic for about two hours after first learning about Global’s bankruptcy, she started a systematic approach to recovering her lost severance pay and getting a new job.

She also started to conserve money, pulling her son, Brian, out of a $700-a-month day-care arrangement, shopping for values, even clipping coupons, which she had never done before.

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Offering a Helping Hand

After forming an Internet discussion group for former Global employees, Mahoney joined 16 other ex-GXers from around the country to create a steering committee to represent the interests of fired workers. They meet often, discussing strategies for recovering money they’re owed, job possibilities, and rumors about their former employer.

They also have sought help from local members of Congress--Democratic U.S. Rep. Louise McIntosh Slaughter held a meeting in Rochester on Saturday to hear their concerns--and brought in lawyers to press their claims in Bankruptcy Court.

“It’s quite a learning experience,� Mahoney said. “I’ll be a different person from all of this. But my first priority is to get a job, and my goal is to be employed in April.�

Many afternoons, while her son is at school, Mahoney heads for the executive employment firm Goodrich & Sherwood, which Global hired to provide outplacement services. Besides getting help for herself, she helps others where she can, such as giving a talk on money-saving ideas.

Mahoney says she saw Global Crossing deteriorating under the weight of heavy spending and dwindling demand from a glut of fiber-optic cable. But like others in the company, she was confused by mixed signals the company was giving.

The company started cutting its work force early last spring, just as it was handing out its biggest bonuses ever. And as layoffs increased in late spring, it opened a major call-center operation in Montreal. In July, it handed out more bonuses.

“It was a puzzling backdrop,� she said.

Now Mahoney is hoping that some of the more upbeat local economists, researchers and planners are right in their views that the Rochester area’s small new firms, including telecom companies, will once again work their magic and pick up those who have lost their jobs.