Saturday, December 29, 2012

Elimination of Redundancies

Are you a redundancy about to be eliminated?

If you work on the floor of the New York Stock Exchange Euronext (NYSE) you may be feeling a tad redundant after hearing that Atlanta based IntercontintentalExchange (ICE) is in the process of buying out your employer for $8.2 billion.

You will have noted that Chairman and CEO Jeffrey Sprecher expects a post-acquisition first year earnings gain of 15% and $450m in savings during year two as redundancies are eliminated and synergies are achieved (read this - your job will be cut). Nonetheless if the fact that a 12 year old company is acquiring the 220 year old NYSE doesn't wake you up, the notion that Mr. Sprecher plans to wring out nearly half a billion in year two should grab your attention.

But wait, U.S. Sen. Charles Schumer says he's pleased that ICE will keep the NYSE floor open in order to maintain the name and the brand ... for now, until the regulatory agencies clear the deal and the dust settles. Given the speed at which ICE has risen to prominence and the obvious aggressive and savvy nature inherent in Mr. Sprecher, the NYSE is headed for tourist attraction status alongside the Statue of Liberty and Times Square. This is all about money and you don't count. But anyway, why not, we're talking about the stock exchange, the Mecca of capitalism, so you should have seen this coming. Right?

Still your position may be dead meat and who needs that. Even though you have seen the steady move away from floor trading it's a hard pill to swallow especially if you are no longer considered of "geekish" age. The digital revolution is once again on display as trading heads to 24 hours and further globalization.

As USA columnist John Waggoner wrote on December 21, "the merger is driven by automation, a force that has thinned the ranks of companies in media, manufacturing and countless other industries in the past decade." He went on to reference the 1987 stock market plunge caused by computer-based trading, noting that "now computers are the dominant force on the NYSE" as we know. No doubt Mr. Waggoner wonders how things will turn out considering ICE's prime position in the mega billion-dollar industry of clearing credit default swaps (read this - derivatives). Recall derivatives? The Great Recession? The housing bubble collapse. Surely it's different this time ...

But back to you and what this all means. In short, you are about to be reminded that you are a Free Agent once again thinking of finding a new job. You are likely a niche specialist and this may help. Hopefully you will find something that pays just as good but I wouldn't bank on it. As you know (and you of all workers out there should) the Marketplace doesn't care what happens to you or anyone else.

In any case, I would like to hear from anyone facing this situation. How do you see it and what are you doing to deal with consolidation and (even more) specialization going forward. As the expression goes there's trouble right here in River City folks and for many on Wall Street, River City just showed up on your doorstep.

Travel well.
John Jeffrey Lundell

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