Plant Closings and Layoffs Mean Heavy Lifting for IT Departments

CIO — Like a tank, the recession continues to roll right over companies. Take Fleetwood Enterprises. Vacation trailers and modular houses don't sell when people are out of work and struggling with upside-down mortgages. Even if someone wants to buy, banks have clamped down on credit, making loans scarce. Fleetwood's sales have plummeted 32 percent from a high of $2.4 billion in 2006, and the company has lost $119 million along the way.

So last summer, like many manufacturers, Fleetwood scaled back factory production. That wasn't enough, so Fleetwood is now going after big cuts. Before filing for Chapter 11 bankruptcy protection last month, the company had plans to close nine of its 27 factories in the United States and Mexico and lay off 760 of its 5,700 employees.

Across the nation, grim-faced executives are breaking similar news. Offices are being consolidated, plants shut, employees let go. Such maneuvers, of course, are intended to save money; Fleetwood expects to save $40 million per year. But achieving lasting results can take months of work performed largely by the IT staff—a behind-the-scenes scramble that is often underestimated by others inside and outside the company. It's not as if the press release and pink slips go out and savings pour in.

There are the obvious chores, such as blocking outgoing employees from corporate networks and redeploying computers. Often, when a facility is closing, IT has to set up new equipment at the remaining offices, such as a bigger data network to handle an increased volume of transactions that a now-closed location used to process, notes Steve Phillips, CIO of Avnet, an electronics distributor fighting to make $150 million in cuts.

But IT executives who made it through the last recession in the early 2000s say the current one's a doozy that brings new challenges.

Now smartphones and thumb drives are everywhere—hard to track and easily loaded with sensitive corporate data, says Mike Jackson, CIO at Rockwell Automation, which laid off 600 of its 21,600 employees in September and is cutting costs by $240 million. Another $50 million to $100 million in cuts are planned to begin in October.

The Sarbanes-Oxley Act (Sox), which didn't exist earlier, provides another new source of pain. At Fleetwood, for example, with other departments focused on consolidating workloads among remaining employees, IT must watch that new job descriptions and business processes don't violate Sox rules on segregation of duties, says Larry Smith, Fleetwood's vice president of IT. Yet Smith finds invigorating the challenges in downsizing projects where so much money is on the line. "This is where you prove you can really manage," he says.

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