IGT cost-cutting may ripple

Effects of staff reductions, cost-cutting and slowing sales at International Game Technology are likely to ripple through northern Nevada manufacturing companies.

IGT, which designs and manufactures computerized gaming machines, last week offered buyouts to 500 employees over age 55.

With the offer came notification that layoffs were imminent in early January, with the number of jobs cut dependent upon how many older employers accepted the buyouts. Incentive offers are based on time and service, says Ed Rogich, IGT's vice president for marketing.

The action is part of a company-wide look at its expenses, Rogich says, adding that the company does not have a specific target for cost-cutting.

It's looking at costs ranging from overnight mail to efficiencies in shipping and operations. And, Rogich adds, consolidation means employees will be asked to take on more roles.

IGT's problem: A slowdown in casino construction.

"A lot of casinos on the drawing board have been affected by financing," says Rogich. And any casino project in the country is likely to involve a contract with IGT, he adds.

Ray Bacon, executive director of the Nevada Manufacturing Association, notes slowdowns in gaming roll through IGT to affect suppliers of sheet metal and electronics and other components of gaming machines.

At root of the ripple effect, says Bacon, are the high energy costs that hit Nevada's tourism economy hard.

"There's a lot of bad news out there," says Bill Edington, professor of economics and director of the Institute for the Study of Gambling and Commercial Gaming at University of Nevada, Reno. "Most casino properties have lost between 55 percent and 80 percent of market value since last October."

And while the economic downturn put a chill on new casino developments, a lot of properties put off replacements of slots, he says.

Add to that the advent of server-based gaming, now in its test phase. Whenever a new technology is pending, it creates a slowdown in orders for existing product, he notes.

Ron Weisinger, executive director, Northern Nevada Development Authority, says, "When we hear about layoffs such as those at IGT it's worrisome to all of us because those are people who are losing their jobs.

We want to make sure those people don't leave the area, but find work in areas that are growing.

Companies in our area are constantly asking for help finding technical and mid-management people. We have constant trouble finding mid-level technical people."

IGT will work with state employment agencies to help displaced employees find new jobs, says Rogich.

The company employs roughly 5,400 workers worldwide, including 3,000 employees at its corporate headquarters in Reno.