A Publication of WTVP

Travelers Group Inc. is buying Citicorp for $70 billion. SBC Communications Inc. is buying Ameritech Corp. for $61.4 billion. Bell Atlantic Corp. is buying GTE Corp. for $52.9 billion. The list goes on-we could continue by naming companies in central Illinois who have acquired, been acquired, or merged, but we'd likely run out of room.

There's a good side to these deals-the resulting larger companies often are in a better position to lower prices, offer better service, and in some cases, give consumers a one-stop-shop for all their needs in a particular industry.

But there's a potential downside, too. When two or more companies combine forces, they often sacrifice jobs or force early retirements. As companies are forced to restructure and global financial struggles continue, 1998 and 1999 could be record years for lay-offs. One analyst reported 523,000 U.S. workers have received news that their jobs will disappear this year. A Chicago-based outplacement firm, Challenger, Gray & Christmas estimates that 10 percent of 1998's job cuts resulted from merged companies reconciling redundant operations.

The reorganization of any business can have a devastating impact on the people affected, not only financially, but also psychologically. It can result in having to change careers, seek unemployment benefits, endure financial hardships, and more. For those who get to stay with the new company, similar stresses to those beginning a brand new job are felt. Sometimes the stress of change is compounded by the stress of being emotionally "demoted" within the new organization. One in five layoff victims is forced to take a job at a lower wage according to recent government statistics. On the positive side, however, a "miss-placed" manager or executive has the opportunity to seek a "dream" second career or pursue hobbies and interests he otherwise wouldn't have had time for.

In some areas, like the radio-TV-newspaper business, there are other concerns. For instance, what happens when just a handful of companies own most of the major papers and stations, and a lot of smaller ones? Does it mean that you and I have reduced access to the news? Are just a few opinions heard on any one topic? Can a moneyed advertiser effectively shut out his competition by insisting on an exclusive position on a company's airwaves? It's not happening now (that we know of), but the potential is certainly there. Deregulation of the communications industry has made it possible.

And how about the airline business? Deregulation reigns there, too, and, with alliances currently underway, there may be only five or six mega companies controlling all the flights. How will that affect the flying public? How about the public that flies out of Peoria? Our own Congressman Ray LaHood has expressed concern over the potential impact of these mergers on the consumer.

The Justice Department's antitrust division is ready to protect us, of course, when some of the mergers and acquisitions threaten the public interest. Unfortunately, the folks at the Justice Department don't always have their finger on the pulse of the rest of America. So they successfully broke up AT & T, even though the rest of us might have paid a significant cost for it. Now they're going after Microsoft, even though there's little evidence that the software giant is doing anything more than trying to establish the superiority of Windows.

Thankfully, not everyone is so afflicted. Caterpillar, for example, has managed to acquire other companies-to compete globally-without the pain that so often accompanies such moves. The company's acquisition of Perkins Engines in England and MaK Moteren in Germany certainly established the company as an engine-manufacturing powerhouse, able to compete with other major companies around the world. But interestingly, the deal was done without any loss of employment, and it seems, to the benefit of all involved. It can be done.

We believe that most mergers and acquisitions-in the long run-can be generally good. In fact, as business people we recognize the inevitability of such actions. In anticipation of declining sales or in efforts to reduce costs and protect profit margins, corporate executives, financial investment companies, and attorneys spend hours in the board room analyzing the best direction for the future of the company as a whole. Unfortunately, sometimes they become so far removed from the implications of their actions that they are oblivious to the human impact of their decision. For so many years, companies have stated in their annual reports or in their "core values" that people are their most important resource. Somehow and sometimes, that concept is set-aside during the negotiating for mergers and acquisitions.

We would like to propose that mergers and acquisitions give strong consideration by those who facilitate them to recognize the value of every employee who works for their companies, doing whatever is necessary to avoid layoffs or early retirements and by providing training for new skills needed for new jobs. As business owners and managers, we also realize that guaranteeing a job and a salary is not an inalienable human right. We are a global society, competing internationally and fallout from mergers and acquisitions is a cost of doing business. IBI