CORNING – What will be the economic impact of the layoffs of about 560 full-time employees at Corning Inc. and staff reductions at other businesses in the region?
“Certainly all of these layoffs and shutdowns will have a tremendous negative ripple effect on our local economy,” said Assemblyman Phil Palmesano, R-Corning. “When you have layoffs the size we’ve seen, it has a tremendous ripple effect on the economy for sure. Small businesses are losing people as well, not just the big companies. It’s across the board for our entire region.”
Susan Payne, president of Three Rivers Development Corporation Inc., a private-sector vehicle for economic development in the Finger Lakes region, said there is no question the job cuts have both a direct and indirect impact on the economy.
“We need to look at the impact and then also what we are going to be — the opportunities moving forward,” Payne said. “We also need to think about the importance of strengthening the various industry sectors despite all the reduction in workforce.”
Payne said each of those sectors are important to the Southern Tier region’s overall economy, whether that is Corning Inc. or other areas, such as healthcare.
“They are all economic drivers,” Payne said.
Corning Inc. recently announced the layoffs of about 260 local full-time, salaried employees due to the COVID-19 pandemic — just a couple of weeks after more than 300 hourly jobs were eliminated at the company’s diesel plant in Erwin.
Gabrielle R. Bailey, a Corning Inc. spokesperson, said cutting of about 560 local jobs and the reduction of salaries to the remaining 5,500 full-time, local workers through an equity for cash program, will help the company preserve its financial health and maintain a strong cash position in the short term.
“In order not to cut more jobs, what Corning Inc. did is implement company-wide salary reductions in the form of cash for equity swap,” Bailey said. “The reduction is anywhere from 5 percent to 40 percent salary decrease for each employee, which is swapped for equity stake in the company, restricted stock options.”
Restricted options are not actual shares, but give the employee the right to shares in the future. The time it takes for the options to be ’vested’ and available to sell is determined by the company.
Bailey said the underpinning message of the equity for cash program is that this is a “shared sacrifice, shared opportunity” approach.
“We feel really strongly about our future and we have some really great growth opportunities ahead,” Bailey said. “I think that this approach is really solidifying how we see things in the future and certainly helping us get through this tough time.”
Bailey said the “equity for cash” program is designed to help Corning Inc. preserve its financial strength by conserving cash, “preserving talent” by saving as many jobs as possible, and increasing employee equity ownership of Corning Inc. The program includes everyone from members of the Board and the executive leadership team to the company’s lowest-paid salaried employees, she noted.
The total staff cuts included about 1,000 positions worldwide, or about two percent of Corning Inc.’s global workforce, Bailey said. The “cash for equity” program impacts all of the remaining 45,000 Corning Inc. employees worldwide.
“The majority of (the layoffs) were here in the Corning area,” Bailey said, but said they were spread out evenly among the company’s operations in the area. “No specific location was more affected than others in the Corning Valley.”
The recent cuts at the Erwin diesel plant were driven much lower demand for catalytic converters, parts of which are made at the plant. That itself is a ripple effect of job and production cuts during the pandemic at companies making cars and trucks.
Bailey said everything stems from the coronavirus pandemic.
“It’s a direct result of COVID-19, and ultimately, the company doesn’t know how long it is going to take for things to recover,” she said. “Obviously, our hope would be that as the economy recovers, the company will return to growth quickly and emerge stronger.”
Bailey said some of Corning Inc.’s other businesses, such as pharmaceutical technology and specifically glass packing for pharmaceuticals, are growing exponentially.
“Corning Inc. has a good balance and diverse portfolio,” Bailey said. “Some businesses are going to recover sooner than others, but the economic impacts of COVID-19 are the direct cause.”
She said the future is also dependent on the pandemic and a hoped-for move toward more normal economic conditions.
“At this point there is no additional workforce reduction planned, and that is certainly not the company’s intent,” Bailey said. “We will see how the next few quarters go in terms of the overall economic recovery, and then adjust accordingly.”
In early April, nearly 500 workers at Corelle Brands, a kitchenware products maker and distributor, lost their jobs as a result of the state’s steps to slow the spread of the coronavirus, according to Jamie Johnson, executive director at the Steuben County Industrial Development Agency. As a result of the layoffs, work at the Pine Street plant has been stalled since then.