MGM Mirage fires over 400 middle managers

[dendrite]

LAS VEGAS -- MGM Mirage Inc., the largest casino operator on the Las Vegas Strip, told more than 400 middle management employees Monday they would be terminated immediately in a cost-saving move, the company said.
The decision will save $75 million annually and came after the company saw weakness since August at its properties, which include Bellagio, MGM Grand, Mirage and Mandalay Bay, spokesman Alan Feldman told The Associated Press.
The move is the largest and swiftest by a casino operator in the current economic downturn, although the use of so-called "extra board" employees such as dealers and busboys who take fill-in shifts as needed has been down citywide.

The Capital Times — 4/15/2008 12:31 pm

[winbig]

I smell lawsuits in the air....how can they just fire people because business is bad? Shouldn't it be laid off?

[suzecat]

Originally Posted by winbig

I smell lawsuits in the air....how can they just fire people because business is bad? Shouldn't it be laid off?

Times have changed.............no more "cause" required to fire employees as employment is "at will" on both sides (employer/employee).

[jetset]

It's another flag on how serious this economic downturn is - the full article from AP has a spokesman saying that visitors to Vegas - if they travel there at all these days - are cutting back on how much they spend.

[classymom]

Originally Posted by winbig

I smell lawsuits in the air....how can they just fire people because business is bad? Shouldn't it be laid off?

In Nevada they can fire you for anything and get away w/ it. My husband was a manager over 150 men at a large construction Co. One of the Vice Presidents took offense to my husband contradicting his method on a certain job in a meeting, next day they let him go.- We went to a lawyer to see if we could file a wrongful termination suit and was told that in Nevada they can fire for any reason.

[winbig]

Originally Posted by classymom

In Nevada they can fire you for anything and get away w/ it. My husband was a manager over 150 men at a large construction Co. One of the Vice Presidents took offense to my husband contradicting his method on a certain job in a meeting, next day they let him go.- We went to a lawyer to see if we could file a wrongful termination suit and was told that in Nevada they can fire for any reason.

That's horrible. Whatever the reason for firing - downsizing or just plain goofing off on the job - looks horrible on ANYONE'S resume`. But of course the law doesn't give a rats ass about anyone's future ability to land a job...it's all about the almighty $ the big corporations pay to lobby for laws that favor them.

[classymom]

Not to mention really screw up someone's self esteem.

[suzecat]

Originally Posted by jetset

It's another flag on how serious this economic downturn is - the full article from AP has a spokesman saying that visitors to Vegas - if they travel there at all these days - are cutting back on how much they spend.

Sadly, discretionary spending is usuallly the first to take a hit in a recession...............as housing and food costs rise, entertainment budgets suffer.

[dendrite]

discretionary spending is usuallly the first to take a hit in a recession

Yes, it's going to be interesting to see what happens, because people can no longer escape the temptation to spend simply by staying at home (because of the internet). Perhaps online gambling will increase at a faster rate than it would have done in better economic times? If so, then bricks and mortar casino owners will soon demand a piece of the internet gambling action.

Perhaps the end of the UIGEA is nearer than we think?



ps
More on the MGM story:

MGM Mirage Dismisses 440 Managers in Unwise Accounting Move
Now even MGM Mirage has become Columbia Sussex.

MGM Mirage dismissed over 400 managers nationwide Monday in a cost-cutting move. Although the majority of the released employees were located in Las Vegas, Michigan and Mississippi were also among the areas affected.

The company estimated the move would save MGM roughly $75 million. The layoffs were effective immediately, and are by far the largest move by a casino operation to reduce labor costs during the current economic downturn.

Alan Feldman, spokesman for MGM Mirage, said the soft market at some of the biggest properties, such as Bellagio and Mandalay Bay, since August had forced the layoffs.

Feldman noted that visitors to Las Vegas have been more budget-conscious of late. "Instead of four days, people stay for three. Instead of a five-star experience, they are going for four stars. Instead of two shows, they're going to one."

The dismissals took place across all sectors, from casino supervisors to marketing and corporate levels.

Despite the company's insistence of the necessity to save a measly $75 million after MGM Mirage grossed $8 billion in revenue last year, construction of the new $8.1 billion CityCenter project on the Las Vegas Strip continues unabated. The new MGM Grand Macau just opened in December, as well.

The decision reflects a common fatal flaw in the reasoning of corporate America, where properties are consistently overrated and people (employees) underrated. In making a typical beancounter decision, MGM sacrifices experience and customer service, choosing to overinvest in structures which then run poorly due to the loss of both quantity and quality of experienced employees.

The casino industry used to be an area that disdained costcutting, instead preferring to alter its bottom line via expanded revenues. It was one segment that always understood, even in tough times one must spend money to make money. Now even MGM Mirage has become Columbia Sussex.

Wall Street definitely took the layoffs as a sign of foreboding, as the MGM stock continued its six month decline, which has become an April spiral downward. Perhaps a gesture of confidence and willingness to withstand the economic troubles would have lifted the stock.

[jetset]

"Yes, it's going to be interesting to see what happens, because people can no longer escape the temptation to spend simply by staying at home (because of the internet)."

That's a very interesting observation imo, Dendrite. It's going to take more self-discipline for sure.