Tuesday, April 09, 2002

Client loss forces Andersen layoffs

7,000 employees to be let go

By The Associated Press and The Cincinnati Enquirer

        CHICAGO — Staggered by a rapid loss of clients because of its role in the Enron scandal, Arthur Andersen said Monday that it is laying off about 7,000 employees, or more than a quarter of its U.S. work force.

        The layoffs, which Andersen had warned last month were inevitable, come with the firm's reputation in tatters, its overseas network fast disintegrating and more U.S. companies replacing it daily as their auditor.

        It's unknown how many of the Andersen Cincinnati office's 385 employees will be affected. Office managing partner Brian Carley didn't return phone calls Monday.

        Andersen's Chicago office said the layoffs will take place in the next several months. Its audit practice and administrative services will bear the brunt of the personnel cuts from among its 26,000 U.S. employees.

        The 89-year-old firm employs about 5,300 people at its headquarters in downtown Chicago, where heavy layoffs are expected.

        “No one can believe this is happening,” said Mimosa Unno, 22, who works in the audit division in Chicago.

        The company said no breakout of planned cuts was yet available. Employees in Chicago were told in an e-mail to check their voice mail Monday night to learn if they should report to work today.

        “Of all the issues we have confronted recently, none compare to the actions we are now forced to take with our employees,” said Larry Gorrell, managing partner of Andersen's U.S. operations. “This decision is even more painful in light of the loyalty, commitment, and the hard work that our employees have demonstrated during this difficult time.”

        Other, unspecified mea sures also are being taken to reduce expenditures, Mr. Gorrell said.

        Since its audit client Enron Corp. went bankrupt in December, Andersen has been hit by a barrage of lawsuits by Enron shareholders and creditors. It also has lost dozens of blue-chip corporations as clients.

        None of Andersen's Cincinnati-based public-company clients — NSS Group Inc., LSI Industries Inc., Cinergy Corp. and Meridian Bioscience Inc. — has left the firm.

        But Columbus, Ind., engine-maker Cummins Inc. and Sara Lee Corp., whose food division is based in Blue Ash, moved their auditing business to PricewaterhouseCoopers. Delta Air Lines Inc., also a member of the Enquirer 80 Index of local-interest companies, have switched from Andersen to Deloitte & Touche.

        Desperately in need of cash in order to survive, Andersen also continues to talk to competitors about selling businesses and transferring many of its 1,700 U.S. partners.

        Managing partners at those firms' Greater Cincinnati offices couldn't be reached Monday, but others at Greater Cincinnati accounting firms said they already have started receiving resumes from Andersen employees.

        “Clearly, there are local repercussions,” said Sean McGrory, managing partner at Grant Thornton in Cincinnati. “(Andersen's) Cincinnati office is as far removed from Enron as any office in the United States could be. ... It's unfortunate, but our firm and others clearly need to be prepared to fill the void.”

        Amy Higgins contributed to this report.


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