BREAKING: Oregonian Makes “Painful But Necessary” Cuts To Staff Pay, Pensions

The Oregonian is cutting pay for all its full time employees by between 5 and 10 percent, imposing furloughs, and cutting off contributions to its company pension scheme in response to the economic crisis.

The paper will up its match on 401k pensions to make up for the effective loss of its company pension scheme.

The paper also plans to lay off production, printing, and part time newsroom staff, and further reduce circulation as the recession has “dramatically worsened” its already “precarious financial situation,” according to an announcement to all employees sent by publisher Fred Stickel this morning:

To: All Employees
From:Fred Stickel A. Stickel and Patrick F. Stickel

You’re all aware we’re facing a severely battered economy; an economic environment few, if any of us, have experienced. The economic crisis has dramatically worsened the precarious financial situation facing the media industry, our Company, and many of our advertising customers.

Newspaper companies have filed for bankruptcy to restructure significant debt. Some have failed. Close to home, the Seattle P.I. ceased publishing a printed newspaper. The Seattle Times is freezing pensions and considering a 12% reduction in employee pay and benefits to avoid bankruptcy. By most accounts, the San Francisco Chronicle won’t survive the year. And The Rocky Mountain News closed after 150 years of publishing.

We want to be open with you about the seriousness of our financial situation. The Oregonian lost several million dollars through operations in 2008 and we do not project sufficient revenue in 2009 to fund our expenses: wages, healthcare benefits, pension, newsprint; all the day-to-day costs of running this business.

We have made good progress in all departments reducing expenses. Since 2007 we have significantly reduced our annual expenses projected through the end of this year and we thank all of you for your help. But it is not enough. In the latest version of the budget we still face a large multi-million dollar gap between revenue and expenses. This is not acceptable. We must take the necessary steps so that we can continue publishing The Oregonian and serving our readers and advertisers.

The executive team has been working with us for weeks to develop a plan that doesn’t damage the paper, preserves as many jobs as possible and positions us for the future. The plan we will outline for you is painful, but necessary.

• We will further consolidate our circulation distribution operation to create new efficiencies and reduce expenses.
• We are streamlining the way we produce and package our paper each day to maximize staffing efficiencies in the P&D plant. This will require fewer full-time press operators. All of our press operators are full-time employees covered by the Job Security Pledge. Therefore, displaced press operators will be reassigned and assist in production operations as needed.
• Some part-time employees in production are being laid off and provided severance packages.
• Part-time positions in the newsroom will be reduced.
• All employees will face reduction/adjustment of their pay as follows:
-Pay for part-time mailers will be adjusted to reflect newspaper industry and market rated pay for similar work to a maximum of $13.62/hr. (contact your manager for your new rate).
–All other part-time employees and all full-time employees will face pay reductions of either 5% or 10% (contact your manager for your new rate) except the publisher’s pay, the president’s pay and the editor’s pay will be reduced by 15%.
-Pay levels for each step on job schedules will be reduced either 5% or 10% (contact your manager for your new rate). Employees not yet at top of schedule will face the pay reduction appropriate to the step they are on. They will still move to the next higher step at the appropriate time.

• A furlough of four unpaid days will be required for all full-time employees. These will be taken one day per week for four weeks in a 10-week time period. Specific days will be determined by your department heads. Managers will speak to exempt employees about scheduling their time off in compliance with wage and hour laws.
• Benefit accruals in our defined benefit pension plan for all employees will be frozen effective May 15, 2009. Vested benefits that you have accrued up to that date will not be lost or forfeited. These vested benefits will be available to you upon retirement. Please note that as required by the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code, we are enclosing a notice that provides you with advance notification of the plan amendments being implemented to the defined benefit pension plan.

Planning for your retirement is important for you and your family and we want to continue to help with it. We are pleased to inform you that we will increase the Company MATCH to our 401(k) plan effective May 16, 2009. Our Company will increase its MATCH to 100% on the first 2% of eligible salary contributed by you, and 50% on the next 4% of eligible salary contributed by you. Some newspaper companies have completely stopped matching employees’ contributions to their 401(k) plans. We are increasing our MATCH.

We must make these adjustments to strengthen our Company and to preserve the jobs we have. We don’t have to tell you how important that is for all of us.

In the greater scheme of things, The Oregonian has been an important part of living in Portland and Oregon for 159 years. I regularly hear from readers, as I know you do, concerned about the state of our industry, people who can’t imagine a day without The Oregonian. Neither can we.

In our combined 84 years of association with this Company, we’ve never been more proud of the hard work, dedication and, indeed, sacrifice you put forth to continue that tradition. We’re confident in our shared commitment and determination as we go forward together.

If you have any questions about these adjustments or the attached ERISA notice, please see Patrick Stickel, your manager, or Tom Whitehouse.

Here’s the attached notice of pension cessation:

OREGONIAN PUBLISHING COMPANY PENSION
NOTICE OF CESSATION OF BENEFIT ACCRUALS
March 23, 2009
You are receiving this Notice as an active participant in the Oregonian Publishing Company pension (the “Plan”) under the Advance Pension Plan (EIN: 13-5576716; Plan Number: 004). This Notice contains important information concerning your future pension benefits.
Beginning May 15, 2009, no new participants will enter the Plan, and the Plan will cease all future benefit accruals. The cessation of benefit accruals generally will provide you with a lower benefit at retirement or termination of employment than you would have earned under the pension formula in effect prior to May 15, 2009. However, in no event will your accrued pension benefit be less than what you will have earned before that date. Please note that you will continue to earn Years of Vesting Service for purposes of vesting and eligibility for normal and early retirement under the Plan, but not for purposes of calculating your pension benefit.
The Plan’s current general pension formula is described below. (Special benefit formulas may also apply in certain circumstances, but the May 15, 2009 cessation of future benefit accruals will apply to those formulas, as well.) Please see your summary plan description for a more detailed description of the pension formula, and for the full definitions of certain technical terms used in this Notice. The summary plan description is available from the local plan administrator representative, Shirley Ross, by calling (503) 294-5147. If there is any conflict between this Notice or the summary plan description and the official Plan documents, the official Plan documents will control. (Of course, the Company continues to reserve the right to change or terminate the Plan at any time.)
Step 1:
(a) Multiply the first $550 of your Average Monthly Compensation (generally, 1/12 of the sum of the Compensation you receive from the later of your date of participation or January 1, 1993, divided by your Years of Credit [as defined below] earned during that period) by 1.0% (.01).
(b) Subtract $550 from your Average Monthly Compensation and multiply the balance by 1.50% (.015).
(c) Add the results in (a) and (b) and multiply by your Years of Credit (generally, each calendar year from your date of participation in which you earn at least 1,950 Service Hours).
Step 2:
(a) Multiply $3.00 by your Years of Credit earned from January 1, 1993.
(b) Multiply 1/10 of 1% (.001) of your Average Monthly Compensation by your Years of Credit earned from January 1, 1993.
(c) Take the larger of (a) or (b).
Step 3:
Add the results from Steps 1(c) and 2(c).
You will receive an updated benefit statement later this year describing your specific accrued retirement benefit. You can compare that benefit to the projected retirement benefit on your prior year’s statement to see the difference due to the cessation of future benefit accruals.
If you have any questions about this Notice, please contact Shirley Ross at (503) 294-5147.
This Notice is issued in compliance with Sections 204(h), 102(a) and 104(b) of the Employee Retirement Income Security Act of 1974, as amended, and Section 4980F of the Internal Revenue Code of 1986, as amended.