Cutback reflect CEO fears
The Associated Press

NEW YORK  — It says something about the current state of the economy when Credit Suisse’s bankers must scale back on color photocopying and ConAgra Foods Inc. dumps a buffet always offered to shareholders at its annual meeting.

Things aren’t terrible, but they also aren’t particularly good, which is why some companies seem to be doing what they can to nickel and dime down their costs to try to preserve profit growth.

No one is forecasting a plunge in earnings. But there certainly is some worry that profits could get pinched amid a pullback in consumer spending and a cooling of the housing market.

A survey by accounting firm Grant Thornton of 369 chief financial officers and senior comptrollers found 87 percent thought economic conditions would stay the same or worsen in the coming months. In addition, 13 percent of respondents said that they thought that their company's financial prospects would deteriorate, while 50 percent expected things to stay the same.

Such findings might explain the current round of cost‑cutting. Some companies are taking drastic measures to resusctate their businesses.

Automakers like General Motors Corp. and Ford Motor Co. are closing plants, reducing headcount and slashing benefits as they face sagging sales and increased foreign competition. Chipmaker Intel Corp., which has been losing market share and dealing with weakening profits, last month said it would cut about 10,500 jobs or 10 percent of its work force, as it looks to save $3 billion a year by 2008.

But some creative reductions are also being taken — which might not save companies all that much money, but certainly signal a more frugal sentiment.

The global investment firm Credit Suisse is asking employees to help it manage costs. One initiative comes from its investment banking division, which is trying to cut expenses for things like non‑client travel and entertainment as well as recruiting.

No longer will any internal meetings be held outside of the office and the company won’t cover meals for employees working in the same office, unless they are “team meals” with managing directors, according to a Credit Suisse memo.

Then there is the crackdown on copying: They can use color copies only for client presentations.

At ConAgra, CEO Gary Rodkin has spent his first year on the job trying to revive profits at the packaged‑food company by closing manufacturing plants and slashing jobs. He took the cost‑cutting all the way to the company’s annual shareholders’ meeting last week, breaking a tradition of serving a buffet of its many foods including Hebrew National hot dogs, Slim Jims and Healthy Choice dinners.