Assignment 5 in HRM

What is Downsizing?

Downsizing refers to the permanent reduction of a company's workforce and is generally associated with corporate reorganization, or creating a "leaner, meaner" company. For example, the database developer Oracle Corporation reduced its number of employees by 5,000 after acquiring rival PeopleSoft. Downsizing is certainly not limited to the U.S.; Jamaica Air cut 15 percent of its workforce in an effort to trim expenses and anticipated revenue shortfalls.

I got some of the discussions in the internet about the cause of downsizing...

When do Firm Downsizing?

Downsizing and closure also visit substantial costs on the communities in which they occur. The businessmen and women responsible for employment and plant closure choices act responsibly, but their responsibility is primarily to their shareholders. The workers and surrounding community affected by the choices face substantial restructuring, retraining and perhaps relocation costs.
In a perfect world, perhaps, the businesses would alert their workers and communities of impending plans to downsize or close plants. In our imperfect world, however, there are two major reasons why this will not happen.

First, the businesses themselves will often have little warning of a change in market conditions requiring downsizing. Business people are optimists by nature, and they have faith that something will turn up to permit continued operation.

Second, any alert to workers and community of a possible closure will be the end of business as usual for that plant. Suppliers will not sell on credit; customers will not make long-term commitments; banks will not provide working capital; workers will search for new jobs on company time. Under those conditions, the possibility of downsizing becomes a certainty.



Source: http://www.referenceforbusiness.com/management/De-Ele/Downsizing-and-Rightsizing.html
http://www.unc.edu/~pconway/Textiles/conway_downsize.pdf


I found some articles of the companies about downsizing...

Posted on August 5, 2009 by BioJobBlogger
Lilly to Restructure and Downsize Its Sales Force

Eli Lilly & Co. is offering buyouts to 4,000 U.S. sales representatives to eliminate several hundred jobs and restructure its operations. Sales representatives will be offered four months' pay in addition to the typical Eli Lilly severance package, which ranges from two to 18 months' salary depending on seniority. The company had a total of 40,500 employees at the end of 2008.

Lilly’s best-selling drugs include Zyprexa for schizophrenia and bipolar disorder, Cymbalta for depression, Byetta for type 2 diabetes, and Evista for osteoporosis. The patent supporting Zyprexa, which bought in $4.7 billion in revenue last year, will expire in 2011. The patents on the company's next three top drugs —Cymbalta, Humalog insulin, and cancer drug Gemzar —are set to expire in 2013.

The restructuring is expected to start in mid-November and take effect in January.

Sales reps and R&D scientists have suffered the most during pharma’s recent three year downsizing binge. While many R&D jobs have been shipped overseas, pharma sales reps might consider a new career in biotechnology drug sales. Growth in biotechnology and personalized medicine drugs is expected to increase for the foreseeable future.

Posted on August 5, 2009 by BioJobBlogger
Lilly to Restructure and Downsize Its Sales Force

Eli Lilly & Co. is offering buyouts to 4,000 U.S. sales representatives to eliminate several hundred jobs and restructure its operations. Sales representatives will be offered four months' pay in addition to the typical Eli Lilly severance package, which ranges from two to 18 months' salary depending on seniority. The company had a total of 40,500 employees at the end of 2008.

Lilly’s best-selling drugs include Zyprexa for schizophrenia and bipolar disorder, Cymbalta for depression, Byetta for type 2 diabetes, and Evista for osteoporosis. The patent supporting Zyprexa, which bought in $4.7 billion in revenue last year, will expire in 2011. The patents on the company's next three top drugs —Cymbalta, Humalog insulin, and cancer drug Gemzar —are set to expire in 2013.

The restructuring is expected to start in mid-November and take effect in January.

Sales reps and R&D scientists have suffered the most during pharma’s recent three year downsizing binge. While many R&D jobs have been shipped overseas, pharma sales reps might consider a new career in biotechnology drug sales. Growth in biotechnology and personalized medicine drugs is expected to increase for the foreseeable future.

Source: http://www.biojobblog.com/tags/downsizing/

Company Website:[url] http://www.lilly.com/[/url]

Other Company Articles about downsizing:

Yet Again :More Downsizing at Bristol Myers Squibb

In a previous post, I suggested that more layoffs would occur at Bristol-Myers Squib (BMS) by December, 1, 2008. The Pharmalot Blog reported today that 800 more BMS employees ( including scientists) would lose their jobs before the end of 2008. Okay, so I was off by about two weeks.

A company spokesperson told the Pharmalot folks that “We are reducing the global Bristol-Myers Squibb workforce as part of our previously announced second wave of productivity initiatives designed to enhance our ability to address the significant challenges and uncertainties our company faces in the short- and long-term. Headcount reductions associated with the second wave of productivity initiatives will continue through 2010, with a goal of a 10 percent reduction in our global workforce. This [layoff of 800] is in addition to the 10 percent workforce reduction previously announced in December 2007.”

Things are obviously not going well at BMS these days. Look for more layoffs in early 2009 and beyond. Who do you think is going to buy BMS?

In a previous post, I suggested that more layoffs would occur at Bristol-Myers Squib (BMS) by December, 1, 2008. The Pharmalot Blog reported today that 800 more BMS employees ( including scientists) would lose their jobs before the end of 2008. Okay, so I was off by about two weeks.

A company spokesperson told the Pharmalot folks that “We are reducing the global Bristol-Myers Squibb workforce as part of our previously announced second wave of productivity initiatives designed to enhance our ability to address the significant challenges and uncertainties our company faces in the short- and long-term. Headcount reductions associated with the second wave of productivity initiatives will continue through 2010, with a goal of a 10 percent reduction in our global workforce. This [layoff of 800] is in addition to the 10 percent workforce reduction previously announced in December 2007.”

Things are obviously not going well at BMS these days. Look for more layoffs in early 2009 and beyond. Who do you think is going to buy BMS?

Posted on July 23, 2009 by BioJobBlogger
Bristol-Myers Squibb to Buy Monoclonal Antibody Maker Medarex

Bristol-Myers Squibb (BMS) announced late yesterday that it intends to purchase Princeton, NJ-based Medarex for $2.1 billion. BMS and Medarex were working collaboratively to develop a monoclonal antibody called Ipilimumab as a treatment for late stage melanoma.

The acquisition represents BMS’s public commitment to transform itself into a “next generation pharmaceutical company” with both pharmaceutical and biotechnology products in its arsenal. Last year, BMS bought Kosan Biosciences, Inc a California-based biotechnology company developing novel cancer treatments. Also, as you may recall, BMS lost ImClone to Lilly in a bidding war over Erbitux—a monoclonal antibody-based colorectal cancer treatment that was co-marketed by BMS.

Medarex was one of the last independent, public, late stage monoclonal antibody development companies in the biotechnology industry. Many of its competitors, like ImClone and Cambridge Antibody Technologies, had already been acquired by big pharma and I was wondering when Medarex would be acquired. I have always held Medarex in high regard and it is a solid and well position company. To that end, I recommended that my mother purchase Medarex stock several years ago telling her that I thought it had a huge upside. Not surprisingly, the stock has been soaring since the announcement; so much so that my mother called me today to tell me how smart I was—go figure.

It is not clear, at present, what effect, if any, the Medarex acquisition will have on the employment situation in New Jersey. Although BMS is headquartered in NYC, it has two large sites in New Jersey, one in Lawrenceville and the other in Plainsboro. As mentioned above Medarex is based in Princeton, NJ. BMS has been steadily downsizing over the past three years and I suspect that there may be more layoffs after the Medarex deal closes. If there are layoffs, more are likely to occur on the Medarex side of the business.

While I have been critical of some of BMS’ strategic moves in the past, I think the Medarex acquisition is an outstanding one and BMS will likely benefit from it!


Source:http://www.biojobblog.com/2008/12/articles/biojobbuzz/yet-again-more-downsizing-at-bristol-myers-squibb/
http://www.biojobblog.com/tags/downsizing/
http://www.biojobblog.com/2008/12/articles/biojobbuzz/yet-again-more-downsizing-at-bristol-myers-squibb/

Company Website: http://www.bms.com/careers/Pages/home.aspx