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Duke Energy Employee Advocate

News - November, 2001

“The important people don't wear suits. They wear uniforms or hard hats.” - Tommy Tomlinson

Media Gets the Word Out

Employee Advocate – – November 28, 2001

Duke Energy has tried to downplay the FBI terrorist attack warning. Meanwhile, the nation's largest distributor of natural gas said that it did not get the FBI warning, according to the 10 News report below.

So, thanks to the media, the warning was received, belatedly. Without the media, companies would suppress even more information than they do now.

In the past, Duke employees have learned about impending layoffs from the media. It was not too long ago that Duke only published “fluff” articles that praised the company. Now they even post some negative articles on their intranet.

It seems that with the widespread, public access to the Internet, Duke realized that tight suppression of the news was no longer possible. The truth can now shine into dark, damp, musty places like bright sunlight!

Gas Company Never Received FBI Warning

10 News, San Diego – November 28, 2001

Company Claims FBI Failed To Warn About Possible Terrorist Attack

The nation's largest distributor of natural gas says that the FBI failed to warn it about a possible threat of terrorist attack.

Southern California Gas Company says that it never received an e-mail from the FBI warning that Osama bin Laden may have approved plans to attack North American natural gas pipelines and facilities if he's captured or killed.

Officials say the messages were sent out earlier this month from FBI headquarters to agency field offices throughout the country, which then forwarded the information to industry officials.

A spokesman for San Diego-based Sempra Energy -- the parent company of Southern California Gas -- says that the company has been on high alert since September 11th.

The company has added ground and aerial patrols, video surveillance and motion detectors in sensitive areas.

Firms Getting Stingy With Layoff Packages

The Wall Street Journal – by Carol Hymowitz – November 20, 2001

To save money, they're finding ways to slash severance pay expenses

Soon after she arrived at work on Sept. 11 - and just as she was trying to absorb the news about the first terrorist attack on the World Trade Center - Karen O'Brien was summoned to her boss's office and told she was being laid off. She was among about 60 employees at International Data Corp., in Framingham, Mass., who were told to leave the market-research company's premises that day.

O'Brien, who was a research manager covering online financial services, took the layoff and even its timing in stride. "I wasn't happy about it but understood they needed to consolidate," she says, adding, "I understood why once they started informing us they kept going" with the layoffs despite the attacks - "although they might have given us an extra day to clean out our offices."

More distressing was learning that after working for just 51 weeks at IDC, she was bound to a noncompete agreement that prohibits her for one year from taking a job at any company that competes with businesses with which IDC is involved. "Lots of companies waive noncompetes in a layoff situation, or shorten them, so I was stunned when I found out IDC wasn't planning to do that, even though I had worked for them less than a year," she says.

She hired a lawyer and got verbal assurance from IDC that the company doesn't plan to enforce the noncompete agreement. But to collect her four weeks' severance pay, she would have to agree in writing to continue to be bound by the agreement. So she is relinquishing her severance. An IDC spokeswoman said "the company considers this a private matter with the former employee." She added, "We are optimistic that we will be able to reach a mutually agreeable solution."

As executives at a growing list of companies slash staffs, some are becoming tightfisted about severance payments. While many still offer enough severance to cushion the blow of layoffs, others are seeking ways around severance or are even breaking prior commitments.

Electronic Data Systems, for example, cut its severance-pay policy earlier this month just before dismissing some employees. Under the new policy, employees of the Plano, Texas, computer-services company with less than three years' tenure will get two weeks of severance pay, while those with more experience will get a maximum of four weeks of pay. Previously, laid-off employees received two weeks of severance pay for each year at the company, up to 26 weeks of pay.

Jeff Baum, an EDS spokesman, defends the change as a way to save money and ensure the company's growth. "We want to make sure that our cost structure is in line with our need for growth - and we want to focus on the people here," he says. Only a "very small percentage" of EDS's 140,000 employees are being cut, he adds.

Compensation consultant Alan Johnson, managing director of Johnson & Associates, believes such actions hurt morale among the remaining employees. "I can understand a company that is insolvent or going out of business perhaps doing this, but that isn't the case here," he argues, commenting on EDS. "And these aren't tough times by historical standards, so don't give me the hardship excuse. Employees - and morale - are being sacrificed to make quarterly numbers."

Other companies have denied employees severance pay by asserting they were terminated because of poor performance. Computer Associates, an e-business software company in Islandia, N.Y., last January terminated about 300 employees, but gave severance to just 80. The company said the others weren't performing adequately. After some complained publicly that they had received good reviews, the company reviewed the terminations and gave severance to an undisclosed number, a spokesman says.

"While many (companies) still offer enough severance to cushion the blow of layoffs, others are seeking ways around severance or are even breaking prior commitments."

The Price of Straight Talk

Employee Advocate – – November 14, 2001

Julia Keller’s article, “The Truth” (Chicago Tribune), mentioned some of the recent problems that people have faced for telling the truth. Governors, attorney generals, news people, federal government officials, writers, and CEO’s have recently been lambasted for telling the truth.

That is one thing that the CEO’s who have orchestrated cash balance pension plans will not have to worry about. They should never suffer any repercussions for telling the truth!

Enough Accounting Tricks!

Reuters - by Deepa Babington – November 12, 2001

Wall Street is starting to refuse to bite the bait on dubious earnings numbers highlighted by corporations in press releases.

Companies tout profit figures, frequently called pro forma results, that strip out unseemly one-time charges and expenses at record levels -- more than $200 billion this year alone. Investors, analysts, and accountants are revolting, and pressure is building to do away with the medley of different profit numbers or at least cut down on it.

Standard & Poor's, a major compiler of earnings and other financial data, now will treat restructuring charges, stock option expenses, and write-downs from ongoing operations as part of a company's operating earnings -- items that many companies exclude from their version of operating earnings.

``In the past, S&P would take a company's special charges at their word,'' said S&P analyst Robert Friedman, who was involved in the project. ``But now we're going to say, 'Hey, wait a minute.'''

The decision underscores the momentum building on Wall Street to scrutinize corporate accounting. One recent high-profile victim of this movement was Enron Corp. The energy trading company faced a crisis in investor confidence after it became clear it had boosted profits and racked up debt through complex financial transactions known as off-balance sheet deals.

The deals, which were structured so they wouldn't show up on Enron's balance sheet, caused Enron to chop almost $600 million off earnings for the last four years. The once-mighty company lost $20 billion in market value, and on Friday agreed to be bought by smaller rival Dynegy Inc.

Investors are scared of such stock market casualties. That's partly why they want to crack down on pro-forma numbers, which often present a much rosier picture of a company's performance because they exclude a whole bevy of costs that drag down the bottom line.

``Hopefully, this will put pressure on companies to think twice when they put out their financials,'' said Friedman. Tech companies, in particular, conveniently have stripped out everything from inventory write-downs to severance costs from their bottom-line figures and pressured analysts to do the same with their earnings estimates.

Mobile phone maker Motorola Inc., for example, reported a third-quarter pro forma loss of $153 million early last month. After including charges for investment impairments, cost reduction activities and additional reserves for its financing of a Turkish cellular operator, however, the company posted a whopping $1.4 billion loss. A Motorola spokesman was not available for comment.

The practice has also made it difficult for analysts and investors to compare the results of one company against its peers as each comes up with its own ideas of what should be included in pro forma earnings.

``There are so many variants of pro forma that it can cloud comparisons,'' said David Zion, an accounting analyst at Bear Stearns.

The proliferation of these reports has also caught the attention of the nation's accounting rule makers, even though they don't have the authority to police press releases.

The Financial Accounting Standards Board (FASB) two weeks ago said it is pressing ahead with a project that will look at how some closely watched items such as pension fund income should be classified and presented in financial statements.

Corporate America was not enthused by the idea and several corporations wrote to the accounting body urging it not to go ahead with the plan, said the project's senior manager, Ronald Bossio.

But fund managers and investors are applauding.

In a survey of 223 portfolio managers by capital markets firm Broadgate Consultants, nine out of 10 stock pickers said companies need to improve how they report results. FASB needs to come up with one key indicator of financial performance, and companies should abide by it, they basically said.

If the accounting rule-making body accepted EBITDA, or earnings before interest, taxes, depreciation and amortization, as a key measure, companies ought to calculate it in a consistent manner and display it as a separate item on their statements, almost all managers agreed.

``I think that pro forma thing is just a way to get around Generally Accepted Accounting Principles,'' said Debra McNeill, a portfolio manager at Fremont Investment Advisors. ``I think there needs to be some guidelines to be set out on pro forma numbers, but it does not necessarily need to be banned.

Some Executives Say Layoffs Are Unpatriotic

The Wall Street Journal - by T. Burton , J. Hallinan – November 11, 2001

It isn't unusual for executives to be called greedy or hard-hearted when they lay off workers. But Boeing Co.'s Sept. 13 announcement that it would dismiss up to 30,000 workers brought forth a new adjective for Chief Executive Phil Condit: unpatriotic.

"The massive layoffs announced by several major U.S. companies are a national disgrace and are helping the terrorists win this war," Edward Cohen, a 64-year-old retired DuPont Co. chemical engineer, wrote in a letter to the Arizona Republic. "The leaders of several companies are clearly showing that they place dollars above patriotism."

Just a few weeks ago, job cuts were largely accepted as a company's rational response to changing consumer demand or a measure of its commitment to profits. But since the Sept. 11 terrorist attacks, layoffs have taken on a new meaning for many Americans: capitulation. According to this view, the attacks on the World Trade Center and the Pentagon not only toppled two skyscrapers, but also rammed the economic pillars of consumer and investor confidence. In this view, companies can and should simply stand tall.

Boeing's Mr. Condit will have none of it. Through a spokeswoman, he says he sees no connection between layoffs and patriotism, adding, "It would be unpatriotic to go out of business."

But other Americans, including some prominent chief executives, say companies have a duty to try to avoid layoffs. "The best way we can respond to acts of terrorism on our soil is to keep the economy strong, keep our employees working, our factories humming, our economy growing, our nation thriving," said Richard Wagoner, chief executive of General Motors Corp. "We're part of the economy, and what we do influences the economy." GM, whose sales of cars and light trucks fell about 30% in the days after the attack, has so far stuck with its pre-Sept. 11 production plans. GM now is offering no-interest financing to boost sales in a campaign called "Keep America Rolling."

Given the sharp drop in commercial air travel since the attacks, many travel-related companies are in no position to pay thousands of employees to stand idle. Since Sept. 11, U.S. airlines alone have cut some 116,000 jobs. And despite the timing, some companies' layoffs aren't really related to the attacks at all: The economy, after all, was already teetering on the edge of recession before the terrorists attacked.

Still, the debate continues to simmer about layoffs and their patriotic implications. One of the biggest cheerleaders for U.S. companies, the U.S. Chamber of Commerce, is urging employers not to use current events as "a time of opportunity" to cut jobs. "We are going to do everything we can to keep America working," said Thomas Donohue, president of the industry group. "Failure to do so gives another victory to the terrorists."

Even outside the aviation industry, layoffs since Sept. 11 have been hefty. More than 14,000 workers have been let go from computer-chip makers, Internet service providers, hotels, casinos, retailers and electronics suppliers. Many companies that cut jobs -- Nordstrom Inc., Excite@Home, Advanced Micro Devices Inc., Eastman Kodak Co., Honeywell International Inc. -- declined or didn't respond to requests for interviews on patriotism.

Some executives who haven't executed layoffs defend the practice. "I think fundamentally you have to do what's the right thing to do for the business," says Alan Lacy, chairman and CEO of Sears, Roebuck & Co., Hoffman Estates, Ill. "I think the corporate sector needs to stay as healthy as it possibly can be."

The most patriotic thing that Bernie Beaudoin, chairman and CEO of Great Plains Energy Inc., says he can do is protect the health of the Kansas City, Mo., utility. "Our duty to our country is to keep the lights on," Mr. Beaudoin says, adding he has no plans to lay off any of his 2,200 workers.

Platt R. Safford disagrees. The vice president of manufacturing for Kobelco Stewart Bolling Inc., a Hudson, Ohio. maker of rubber-making machinery, is urging senior managers to avoid layoffs and continue spending "for no reason other than it's the right thing to do for the country." In September, Mr. Safford bought an $8,000 metal-testing machine that he describes as "purely optional," and says acts of "simple patriotism" may buoy the economy in current months. He is still looking to fill openings on his staff. "There really are things more important than quarterly profit numbers," he says.

Mr. Safford concedes he may have a different approach to these issues than many U.S. executives because Kobelco is a unit of Japan's Kobe Steel Ltd. "For most Japanese companies, being a good citizen is more important than making profits," he says.

It isn't the first time that a national crisis has cast an unflattering light on U.S. executives' behavior. In the past, companies have been criticized, and even prosecuted, for conducting trade with unfriendly nations. In 1996, for instance, equipment maker Case Corp. pleaded guilty to violating U.S. law by assisting in the sale of construction equipment for use on a massive irrigation project in Libya, and agreed to pay $2 million in fines and related payments. And playwright Arthur Miller focused his drama "All My Sons" on the criminal implications for an American defense contractor that made defective parts that resulted in the deaths of U.S. airmen. Mr. Miller says the play was based on a real World War II case.

But layoffs typically haven't been an issue during times of war. The economy was so overheated during World War II that the main concerns were keeping inflation in check and rationing goods like rubber, gasoline and food. "There were so many jobs in the war industries that they were looking for people rather than laying them off," says Richard R. Lingeman, author of "Don't You Know There's a War On," about the home front. Demand brought thousands of women to the work force for the first time.

But in the new war on terrorism, "business is going to be as much about patriotic duty to sustain a strong economy as it is about the bottom line," says Brad Brinegar, chief executive of advertising company Leo Burnett USA, a unit of Bcom3 Group Inc. "I don't think you can not include that in your thinking at this time."

Leo Burnett isn't planning any layoffs: Its work force is already reduced. In February, it let go 200 of 1,500 U.S. workers.

- Scott Thurm and Gregory L. White contributed to this article.

Stealth Layoffs

Mercury News – by Peter Delevett – November 10, 2001

(11/8/01) - Two of the valley's premier names in computing may be heading ever so quietly down Layoff Lane.

IBM last week told 80 workers at its San Jose software division to start looking for new work, according to one of those pink-slipped. That's roughly 5 percent of the workforce at IBM's Santa Teresa Labs.

Apple Computer, meanwhile, has been making small job cuts across a range of departments. That word comes from an Apple employee as well as from a number of independent, Apple-related Web sites.

Layoffs are nothing new in this economy. But these are noteworthy not just for the high profiles the companies cut, but also for their stealthiness. Management at both firms is working very, very hard to keep the cuts quiet.

IBM officials at the Santa Teresa plant referred questions to a spokesman in New York, who did not return calls by press time.

An Apple spokeswoman said she was looking into the reports but couldn't offer any comment.

The employee in IBM's software division says 120 jobs were slashed divisionwide, including those belonging to colleagues in Toronto.

``The layoff came as a surprise; there were no rumors,'' says the worker, a 20-year veteran of Big Blue. Employees have been given until Dec. 3 to find new jobs internally, but my source says most other divisions are either full or have frozen hiring.

The worker also says managers warned that more cuts are planned next month at IBM's Cottle Road plant, which develops disk drives and data-storage systems. An IBM spokesman there says the company doesn't comment on speculation.

Another IBM worker says at least 40 contract and temporary workers were cut at Cottle Road this summer, though management at the time did not confirm that…

May You Live in Interesting Times

Employee Advocate – – November 6, 2001

“May you live in interesting times” is a Chinese curse. Who would disagree that we are now living that curse? Does anyone recall times that were more interesting?

Of course, the events of September 11 top the list of unusual events. Even after almost two months, the events that transpired still do not seem real. Even if only one kamikaze plane had crashed that day, it would have still been a shock of epic proportions. One plane crashing into one of the World Trade Center towers would have been unbelievable. Planes crashing into each of the WTC towers really shocks the mind. A jet also crashing into the Pentagon makes the whole episode even more incomprehensible. As if this were not enough, a fourth jet was in route to do more damage. Evidently, the passengers fought the hijackers, causing the plane to crash.

That was a lifetime’s worth of news in one day. Then, both WTC towers collapsed!

Now we have anthrax in the mail system. Bridges and nuclear reactors have been said to be terrorist targets.

In the space of one month, three bus passengers have attacked a driver causing a wreck. The Associated Press reports that the last bus passenger attack on a driver caused the bus to roll at 70 m.p.h. This was apparently not a terrorist attack, but a man upset because he could not smoke on the bus!

You know what the typical management solution to any crises is: Lay off more employees! That will certainly make everything better.

These are truly interesting times. And, based upon the episodes of the past two months, things are likely to get worse before they get better.

Our Decentralized Energy Future - David Morris - November 1, 2001

If Congress wants to stimulate the economy in a way that will have both a short-term and a long-term positive impact, if it wants to give a gift that will keep on giving, it can do no better than to stimulate on-site, decentralized electricity generation. Technologies are now available that can transform households and businesses and office buildings into electricity producers. A national effort to introduce these technologies will make our energy system more secure. A million power plants make for far less attractive terrorist targets than one giant power plant or one giant transmission line.

Our energy system will be more secure for another reason. More than 90 percent of proposed power plants will be fueled by natural gas. This burdens our pipelines and potentially, makes us dependent on imported gas and scarce gas reserves. The key problem is that a large central power plant fueled by natural gas, just like a large central power plant fueled by coal or oil or uranium, loses two thirds of the energy burned in the plant as waste heat. Less than a third of the energy consumed in the power plant actually enters our buildings as electricity. On-site power generation, on the other hand, can use the heat produced which can double and even triple overall energy efficiencies.

Our electricity system not only wastes fossil fuels, it wastes renewable fuels. Sufficient sunlight falls on a typical home in the United States to provide all the energy an efficient home needs on a year round basis. That's an enormous wasted resource. Indeed, in many parts of the country black rooftops soak up solar energy which heats up the house in the summer, increasing our demand for electricity for air conditioning. Thus sunlight right now is actually increasing our consumption of fossil fuels. In contrast, solar cells - devices that use sunlight to generate electricity - are now being built into rooftops and the sides of buildings. The price is tumbling. In 1975 a household solar array cost over half-a-million dollars. Today the cost is as low as $10,000.

So what should be done? I say we should launch a Manhattan Project level effort to reduce our vulnerability to terrorist attacks and our reliance on imported fuels by literally and figuratively empowering Americans to become energy producers. In larger buildings this means quickly converting boilers into power plants that supply electricity as well as heat. For federal buildings, managers should be given the financing to do this whenever the payback is less than 15 years. For private buildings the federal government should offer to finance any such investment that has a 10 year payback or less.

Fuel cells and microturbines are very small scale power plants that are just coming into the marketplace. For these the federal government should enter into contracts with a dozen or more manufacturers to buy an increasing amount of power at a guaranteed decreasing price. And the government should supply the money needed to allow manufacturers to quickly scale up their production processes. In the 1950s, an arrangement like this between the Navy Department and manufacturers of transistors quickly drove the price of transistors down dramatically.

For households the federal government should support a massive effort to install solar cells. Again, it should enter into multi-year contracts with manufacturers for an increasing purchase of solar cells at a price that is reduced each year. And it should offer households a rebate that covers the difference between the cost of solar electricity and their current cost of electricity. The rebate would be lower in communities with high cost electricity and higher in communities with lower cost electricity. This would allow all communities to participate in this national movement. The rebate would be short-lived, perhaps two years, until the increased manufacturing volume drives the price down to competitive levels.

And state and local government that joins in the effort should be rewarded. For example, in a few days the citizens of San Francisco will vote on whether to approve a $100 million bond that can be used for solar cell installations. If they approve this initiative, the federal government should match the amount used for solar cells and provide such financing as is needed to cover startup costs.

The manufacture of small power plants generates more jobs than the manufacture of large power plants. The installation of millions of small power plants will generate a massive demand for skilled labor. Thus at the same time as the federal government works with household and office building owners and manufacturers to drive volume up and prices down, it needs to finance a national job training program for installers and service technicians.

A multi-billion stimulus package to literally bring power to the people will spur the installation of millions of small power plants. These will generate the electricity we will need to meet future demand. They will also dramatically improve the environment, reduce our dependence on long fragile energy supply lines and create large numbers of well-paid jobs.

In World War II we were asked to sacrifice for the war effort. Today we are being asked to shop. A national effort to literally and figuratively empower Americans would be compatible with the current emphasis on increasing buying. But it would encourage a kind of buying that can have an enduring impact, not only economically but socially and psychologically on Americans. I believe such a bold effort would be enthusiastically embraced.

This is David Morris for

News - October 2001