Bank Of America Slashing 30,000 Jobs: Will RI Be Affected?
Tuesday, September 13, 2011
Bank of America will slash approximately 30,000 jobs in an effort to save $5 billion per year by 2014, the company announced Monday.
The layoff numbers are about 10,000 less than original speculation last week, but still more than enough to cause a major stir in the business community and leaving Rhode Island’s top economists questioning what the potential impact could be for the company in the state.
Of the 288,000 Bank of America employees throughout the world, about 3,500 work in Rhode Island.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTStreamlining The Company
The latest round of cuts reflects a new initiative that streamlines the company, according to a statement from Bank of America.
“Bank of America’s Project New BAC is key to the company's strategy of focusing all of its resources on serving individuals, companies, and institutional investors,” the statement said. “The first result of New BAC was the recently announced management reorganization, removing a layer of management and streamlining the company by aligning its businesses with the customer groups.”
The company has been moving forward with its reorganization efforts since last January.
“Bank of America's goal is not a given number of job reductions, but rather implementation of New BAC decisions,” the statement said. “As the decisions are implemented, employment levels in the areas under review during Phase I are expected to be reduced by approximately 30,000 jobs over the next few years. The company expects that attrition and the elimination of appropriate unfilled roles will be a significant part of the anticipated decrease in jobs.”
A Significant Impact On RI
While Bank of America spokesman T.J. Crawford said the company isn’t providing a geographical breakdown of the layoffs, Dr. Edward Mazze, Distinguished University Professor of Business Administration at the University of Rhode Island, said any cuts in Rhode Island will have a significant impact.
“Bank of America's anticipated reduction in force in Rhode Island will have a significant impact on the Rhode Island economy by increasing unemployment and increasing the number of underemployed since there are few new jobs being created in this employment sector,” he said. “The reduction would also lead to closing some branches and reducing office space needs in Providence. It would be expected that almost all major credit and philanthropic decisions will be made in Charlotte, North Carolina with each decision taking longer to make. “
On the bright side, he said, some of the smaller banks may be able to pick up where Bank of America may leave, according to Mazze.
“If there was a positive result for the layoffs it would be that other banks in this market area, particularly the community and federal savings banks, will increase their market share, namely, the number of depositors and borrowers will shift their business to these banks and the competing banks will be able to hire well trained Bank of America employees,” he said.
No Margin For Error
Still, URI economist Leonard Lardaro said Rhode Island allows the national economy to dictate too much of the local economy, which makes a decision to cut 30,000 jobs across the world still has a the potential to have a deep impact on Rhode Island.
“Rhode Island has become too dependent on national growth,” Lardaro said. “And we don’t have a margin for error.”
Lardaro said it’s bad for the state’s image to lose high-salary managerial positions and that the Bank of America layoffs are just another sign of a slowing economy.
“I’ve said there is a 50 percent or better chance of a double-dip recession in Rhode Island,” he said. “I hope I’m wrong.”
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