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The Bottom Line on the Front Lines
By Mark Zdechlik, Minnesota Public Radio
May 2, 2001
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Throughout the country, businesses are responding to the economic slowdown. In Minnesota alone, tens of thousands of workers have lost their jobs in the last nine months.

While economists debate whether the economy has hit bottom, real-world managers are faced with hard choices; none tougher tougher than the decision to lay off workers.

Fred Berdass says up until just a couple of months ago, his factories couldn't keep up with demand. Then the bottom fell out.
(MPR Photo/Mark Zdechlik)

BERMO INCORPORATED MAKES ALL KINDS of housings and enclosures for electronic equipment. It turns out tens of thousands of plastic and metal computer cases, DVD and telephone shells and much more for customers worldwide, including big names like Cisco Systems, and Dell Computer.

CEO Fred Berdass says up until just a couple of months ago, his factories in Minnesota, California, Mexico and Scotland couldn't keep up with demand. Then the bottom fell out.

"It slowed up the third week in February and I think we went all the way up until the third week in March and then it became apparent there was not enough work to keep them busy," Berdass says.

You'd never guess Fred Berdass is 80 years old. On a tour of Bermo's Circle Pines plant, which is attached to the company's headquarters, he asks if the walk through the facility larger than five football fields is lasting too long.

The space is filled with dozens of massive machines. Some mold plastics. Others transform huge rolls of steel into metal boxes destined to be filled with circuit boards and switches.

Many of the machines are worth more than $1 million. And many sit idle.

"That's one of the big handicaps that you have today when you are capital intensive," Berdass says. "Unless you can keep the machines running throughout the year, you have great difficulty maintaining your business. The cost of the equipment, the cost of maintaining it and paying for the equipment, if you're not using it you get punished."

The problem for Bermo and other manufacturers is their customers - high-tech companies who've been at the epicenter of the slowdown - are hesitant to move ahead with new orders.

"Right now they won't even commit. They will not say when we're going to take it, they will when they are going to reorder. They're trying to look at their own horizons and see where are they going and you know they're laying off people. They're doing all kinds of things. And all of these things are very interruptive. And all of these things make even forecasting more difficult," according to Berdass.

In late March, declining sales forced Berdass to trim his worldwide work force from about 800 to 500 people.

"We feel very badly having to let people go. This is not something that we like to do. And if you have ever done it yourself, it is a very difficult thing to do. This is their livelihood and we're taking that away from them."

Those who remain could very well find themselves working on projects outside Bermo's normal business area. Berdass says about all a company like his can do when sales drop, is cut expenses by cutting jobs, and reach out for new business in hopes for finding enough work to help pay the bills.

"We will solicit other industries. We will probably diversify into other fields. We'll do all we can. We have a very good relationship with our clients. I am sure as things pick up they will favor us with further business," Berdass says.

Berdass, who's been in manufacturing for more than 50 years, says he's never seen business drop off so quickly.

"You always look for causes, and I think the causes are really not that easily identified. You can blame Greenspan, you can blame Bush; it probably has nothing to do with that at all."

Berdass says he thinks it could easily be a year before sales are brisk once again.