In the scheme of things, it was a transaction of infinitesimal significance to a big corporation in the throes of reorganizing following a $1.3 billion merger.
It occurred ironically the day the nation’s third largest air cargo shipper, DHL, proclaimed its successful integration with Airborne Express, the former Seattle-based delivery company it gobbled up in a merger announced last September.
In truth, the delivery of air bill 724097390 from Seattle to Bucerias, Mexico, never was properly completed. But its circuitous route into the hands of its recipient demonstrated how premature DHL was in announcing success, aside from shedding 1,300 jobs and installing a new senior executive team.
Yet, the merger of the No. 3 and No. 5 air cargo companies is typical of many corporate marriages that are usually roundly applauded by Wall Street for their potential sweetening of the bottom line. Though the job losses create sympathetic angst, the mergers that lead to them have much to do with us who contribute to our IRAs, 401(k)s, 503(b)s, Keough and pension funds that invest our money in these mega-giants.
Mergers are nothing more than a reflection of the dynamics of domestic and now international capitalism. Since first introduced to them in my 7 a.m. Economics 101 class of 40 years ago, they haven’t changed much.
You may know that corporations, legally, are equated the same rights, liabilities and opportunities as people in our society. But in practice, they often behave very differently. Corporations exist for no other reason than to make money. Contrary to the thought expressed in many columns here, their primary purpose does not include hiring people, let alone treating them like human beings or caring much when they have to let them go.
Those that do, however, tend to be far more successful financially than those that follow standard practices taught at most prestigious business schools, numerous surveys show.
In addition to creating a new economic reality, mergers nearly always transform the basic culture of the resulting new corporation. A prime example is the Boeing Co., where seven years after absorbing weaker rival McDonnell Douglas, veteran employees see a distinct culture shift from paternalistic to bottom-line management decisions.
A focus on returning to profitability and thus satisfying short-term shareholder interests can make a decision to eliminate nearly 40,000 jobs easier to justify than in previously equally harsh downturns. To its credit, Boeing’s senior leadership is adamant that the days the boom-bust hiring-firing pattern pursued over the last 20 years are over.
Mergers do not have to result in wholesale job losses, however, which is evident by Viacom’s successful absorption of Paramount in 1994, and later CBS, where the integration was fueled by efforts to first blend two disparate workforces and to limit the number of layoffs.
A special Viacom-Paramount job-saving committee successfully placed 60 percent of employees scheduled for layoffs in new jobs in the new company. Other committees worked to integrate wide disparities in pay scales, vacations and other benefits between the two companies into one employee economic package. Workplace “climate” surveys led to establishment of a corporatewide family-friendly and life concerns.
Practicing these steps in subsequent acquisitions has allowed Viacom to largely retain the culture it embraced before becoming the media giant it is today, senior human resource executives say.
The news release proclaiming that the new DHL had been fully integrated with Airborne Express was more fancy than fact, if our experience is any guide.
Shipping rates and billing and international delivery paths of each company remain separate, according to employees, and our experience with frequent shipping to Mexico. If a DHL representatives picks up a shipment in Seattle, it will be delivered to our recipient near Puerto Vallarta by DHL. But when DHL dispatched an Airborne agent to pick up our package, it cost more, took longer and was placed in the hands of a one man Puerto Vallarta delivery firm called “Superman,” who left a nearly undecipherable note after attempting delivery at 6:30 p.m.
So we must remind ourselves, as we nervously track our most recent shipment, that mergers usually aren’t made to benefit employees or customers. The surviving senior executives, those departing with generous severance packages and hopeful shareholders are well aware they are the true beneficiaries, at least for the short-term.
Write Eric Zoeckler at The Herald, P.O. Box 930, Everett, WA 98206 or e-mail mrscribe@aol.com.
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