RE: Now Energy Companies want to downsizes!Great

DTE braces for big layoffs to slash costs
Workers are on edge as utility prepares for what could be the largest downsizing in 50 years.
Nick Bunkley / The Detroit News
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DETROIT-- DTE Energy Co., Michigan's largest utility, has begun a sweeping cost-cutting endeavor that could lead to its largest round of layoffs in at least 50 years.
While it's not clear how many of DTE's 11,000 workers will lose their jobs, DTE President and Chief Operating Officer Gerard Anderson said that layoffs are a certainty.
"We're not going to get through this process without impacts on our employees," Anderson said in an interview with The Detroit News.
DTE, which owns Detroit Edison and Michigan Consolidated Gas Co., is scouring its operations to eliminate costs and become more efficient -- an effort that could eventually lead to lower bills for customers.
DTE has hired consultants to assist the effort and company officials hope to give employees an idea of what kind of reductions will take place in the first half of next year.
An internal report distributed to senior staff members at DTE in October and obtained this week by The Detroit News reveals the types of steps each unit of the company is taking to identify cost-cutting.
The report shows that DTE's fossil-fueled power plant division has 2,010 employees, 39 percent more than "top quality target" utilities, and that eliminating the extra workers could save $62 million a year. The unit spends 176 percent more on staff benefits and 50 percent more on overtime than best-practice companies.
Anderson called the internal report an "early diagnostic" effort to determine a course of action and not an indication of the company's plans. The numbers in it have not been agreed upon or validated, meaning the company has not analyzed whether those target utilities have differences that allow them to operate with fewer workers or lower costs than DTE.
Anderson said he and other executives have made it clear to employees, most of whom are in Metro Detroit, that there will be downsizing.
The leader of DTE's largest union, however, said that while workers are aware the utility is looking to cut costs and know the possible outcomes of such an undertaking, they have not been told to expect layoffs.
The process has created anxiety among workers because the company has never taken such broad steps. DTE continually examines its efficiency, but the initiative now under way goes far beyond that.
DTE has reduced its work force over the past two decades through attrition and recently with a few pink slips, said Jim Harrison, president of Utility Workers Union of America Local 223, which represents 4,500 DTE employees in a variety of positions. But a mass layoff hasn't happened since 1955, when the company eliminated its power plant construction department. Even then, most of those let go were rehired.
At a time when Michigan's economy is creating uncertainty for many workers, DTE employees fear hundreds of layoffs could be coming, Harrison said.
"They haven't said to us at all that layoffs or a reduction in work force are going to happen," he said. "What they have said to us is that benchmarking data suggests, based on first-quartile companies, that we may have too many people."
First-quartile companies are utilities whose costs are lower than 75 percent of others in their industry. As it determines cuts, DTE is comparing the size of its work force; spending on benefits and overtime; the number of contractors it hires; and other expenditures to top-performing utilities.
Anderson said a confluence of factors, including unprecedented fuel prices, regulatory requirements necessitating major investments and changes within the utility industry, have prompted the company's austerity push.
DTE said it is not responding to an ongoing investigation by the Michigan Public Service Commission into unusually high administrative costs, he said. The efficiency push was started months before regulators raised the issue. DTE must report to the commission on overhead costs by Feb. 1.
"Our customers are going through about as tough a time economically as we have seen," Anderson said. "They deserve to see us go through our costs as diligently as they have had to. They expect that their energy company is going to bear some of the burden here.
"We're not doing it because we're in financial distress or bankruptcy is looming. We're doing it because our customers deserve it and the evolution of the industry requires it."
DTE provides electricity to 2.1 million customers from the Ohio state line into Michigan's Thumb. It delivers natural gas to 1.2 million homes and businesses in most of Wayne and Washtenaw counties and other parts of the state.
Detroit Edison's rates are among the highest in the Midwest, and MichCon's rates, while among the lowest nationwide, are noticeably higher than the state's other big utility, Jackson-based Consumers Energy.
Rates are set by the public service commission, which reviews utilities' expenses when responding to requests for increases.
Daniele Seitz, a utility analyst for Maxcor Financial in New York, is glad to see DTE thoroughly examining its operations. Utilities can over time become bloated as they deal with regulatory requirements or when growth of their customer base slows
Now that they face competition -- Michigan enacted an electric choice law five years ago -- utilities are forced to be more vigilant over their operations, Seitz said.
"You don't want it to cost any reliability, but in any business it's always good to review the way you do things," she said.
Seitz said it is difficult to compare utilities' costs because of variables such as the amount of union labor they use and the density of the population they serve.
Layoffs rumors were addressed Monday in an employee newsletter, DTE Daily: "While there are no specific goals for the numbers of employees to be released, it is expected that job losses will be an outcome of the process efficiencies that currently are being identified and evaluated."
Harrison, the union president, said he hopes DTE proceeds cautiously and takes into account that many employees are nearing retirement. Sizeable cuts now, followed by many workers retiring in a few years, could lead to problems.
"If you have a lot of people go out the door," he said, "you compromise your knowledge, safety and reliability if you don't do it right."
Detroit News Staff Writer Brett Clanton contributed to this report. You can reach Nick Bunkley at (313) 222-2293 or nbunkley@detnews.com