Minneapolis / St. Paul News Blog

Publisher Chris Harte announced the terminations in a memo to employees this morning. Roughly three quarters of the cutbacks will come from the circulation department. The 58 positions amounts to three percent of the newspaper's total workforce. Harte also announced a wage-freeze for all non-union employees. Read the memo after the jump:

In my note to you a couple of weeks ago, I tried to give you a realistic picture of the state of our business. While we are a very strong and profitable company and by far the leading media organization in the Twin Cities, we are currently battling persistent revenue declines, as are most media companies. We have continued to analyze possible expense reductions in each area of the company to deal with our revenue gap and to make us more efficient going forward. We have now settled on several actions that we will be taking over the next few weeks, and I hope it's clear that these steps are designed to keep us strong for the future.

We recognize that this follows a year of aggressive cost-cutting,
including a significant workforce reduction mostly through voluntary
separation programs announced last May. At the time, we thought these
steps would be sufficient to stabilize the business, but our
advertising revenue projections were too optimistic. Since then, the
national and state economies have further weakened, and our key
classified markets-real estate, automotive and employment-- have fared
even worse than the overall economy.

Because of this, I am announcing some incredibly difficult decisions
that come only after searching unsuccessfully for less painful
alternatives.

First, I am announcing a wage freeze for all independent employees.
Normally, we would be giving wage increases in the March/April time
frame to eligible independent employees. We have not yet determined
how long the freeze will be in effect. To a great degree, that will
depend upon when our revenue starts to rebound. (Meanwhile, we will do
our Performance Evaluation Assessments (PEAs) without the wage
increase component.)

Salaries of senior executives-my direct reports and me- were frozen
last month. Union wages are determined by individual union contracts,
and we have just begun a process with Restructuring Associates (RAI),
our consulting firm, to explain our situation to all our unions and
seek their cooperation in addressing our significant business issues.

My second announcement is even more painful than the first. Today we
will notify impacted employees of the elimination of 58 positions
across the company. This is about 3 percent of our total workforce.
These will be involuntary terminations, not a voluntary separation
program, but those who are terminated will be offered the identical
severance benefits as were offered to those who took buyouts last
year.

About three-fourths of the involuntary terminations are in the
Circulation Department, where we have recently made substantial
changes to our operation through the introduction of new technology,
streamlining of single-copy distribution processes and conversion to
independent agents for management of home delivery. Smaller numbers
of terminations are coming from around the company.

The third set of actions will be further cuts to our non-labor expense
budget. As you know, wages and benefits are more than half of every
dollar we spend on operations, and newsprint is roughly another 18
percent, leaving only about 25 percent of our cash expenditures for
everything else. Despite the large cuts we have already made, I have
asked our senior executives to do their best to find more reductions
so that we can minimize the need for further job eliminations.
Specific plans are underway or under study in every department, and we
are implementing reductions whenever and wherever we can prudently do
so.

Going forward, every department has been asked to continue looking at
all possible solutions to become a more efficient company, including
new technology and outsourcing of functions that are not core
competencies to our business.

As we are taking these actions, I want be clear that the cuts we are
announcing today have nothing to do with the Restructuring Associates
project, which is just beginning. The RAI consultants are working with
our managers to prepare a presentation on the state of our company,
designed to give all our employees a better sense of what we are up
against. I realize we are making some far-reaching decisions without
everyone fully understanding why we must take these steps.

But we are working as fast as possible to close this information gap.
If you have gone to RAI's website
[http://www.restructuringassociates.com/], you know that shared
understanding and collaborative problem-solving is fundamental to
their approach. Our hope is that in the next couple of months we will
have conducted sessions throughout the company that explain our
situation in much more detail.

I also want to emphasize that while we are cutting in some places, we
are investing in others as we adjust our course to stay competitive in
this rapidly changing media environment.

We fully realize that our success as a company depends upon all
employees understanding what our direction is and why, and in the
weeks and months to come we will provide you with the information you
need to help us get to the right solutions for our long-term and
mutual success.