Phil "Mr. Timesizing®" Hyde

Downsizings in December/98
[Commentary] © 1998 Philip Hyde, PO Box 622, Cambridge MA 02140 USA


[Scrooge Lives! - this from the Herald - the Globe only devoted 5 col. inches to it -]
12/30/98 Companies ring in the job cuts - Workers getting [7,225] holiday pink slips, Bloomberg News via Boston Herald, p. 30
...That could make December the heaviest month for cutbacks for the second straight year. January used to be the most popular month. But more companies are willing to spoil the holidays for workers so they can record the costs of the cuts in the current year's ledger.... Also, damage control is easier between Christmas and New Year's, when Americans pay more attention to vacations than to current events. "They want to get the dirty work out of the way," said John Challenger, chief executive of a Chicago employment firm, *Challenger, Gray & Christmas. "Who wants to start the new year with layoffs?"
[Hey, John, we'll soon find out the answer to that, won't we! Care to put some money on the view that nobody does? Here's a breakdown of the current ones -]

  • 2,750 jobs = 3%, Halliburton Co., Dallas (oilfield services). Conservative Alternative - cutting everyone's workweek to 38.8 hours and their pay to 97% could accomplish the same result without loss of jobs and market share
  • 1,500 jobs = 55%, Kitty Hawk Inc, Dallas (air-freight carrier). Conservative Alternative - cut the whole company's workweek to 18 hrs and their pay to 45% and keep them all employed.
  • 1,000 jobs, Cooper Industries, Houston (toolmaker)
  • 1,000 jobs cut = 7.1% of their workforce, SPX Corp (auto-parts). Conservative Alternative - cut the whole company's workweek to 37.2 hrs and their pay to 92.9% of 40-hr level.
  • 975 jobs = 6%, Conoco Inc. (6th largest U.S. oil company). Conservative Alternative - cut the whole company's workweek to 37.6 hrs and their pay to 94% of 40-hr level and keep everyone employed.
    U.S. companies announced more than 574,000 job cuts in the first 11 months of the year, the most since 1993, when there were more than 615,000. Last December, more than 58,000 job cuts were announced out of 434,350 for the year.
    [Pipedream Dept. -]
    SPX investors cheered the plan to cut 1,000 employees...and close 25 factories and offices. The job cuts "should be viewed very positively, as opposed to being bad news," SPX spokeswoman Tina Betlejewski said. The company will be "healthier" and able to provide more job security to the remaining workers, she said.
    [And if believe that, we got a Bridge to sell ya - this prediction is about as trustworthy as the assurances from the mouth of Beetlejuice in the title role of the movie of the same name.]
    While companies may be able to bury job-cut announcements in the holiday crush, they still pay the price.
    [That's right, in their local markets.]
    "The holidays are a time we're supposed to be looking out for one another," said Barbara Sferra, a consultant at HR Solutions Inc. "Instead, you feel like you get stabbed in the back."
    [Right on, Barbara! Employees at some companies, such as Lincoln Electric and Nucor, do sacrifice together and they are phenomenally successful. A nation divided against itself cannot stand. And as top executives intensify the war between themselves and their own employees, and between the nation's investors and the nation's workforce, America slides further toward third world status. And the stupidest thing about this suicidal downsizing excuse for a strategy, is that they're cutting their own best markets, always on the pipedream that this is a one-time thing. It's like our Porter Square shopping plaza here in Cambridge, Mass. How do the owners think they can shrink the parking lot and get the customers to support more and bigger stores? Dumb and dumber!

    12/28/98 Out of balance - A growing number of workaholics, including women, are putting themselves at emotional risk, by Alison Bass, Boston Globe, p. E1.
    [Starts with case of a woman] who worked her way up from receptionist to office manager of the Oakland branch of a national elevator service company...and was happy to work late when her bosses needed her.... in short, the ideal employee...a competent worker who gave her all to the job.
    But when her boss suddenly took her title away - and with it some of her responsibilities, [she] went into an emotional tailspin. She felt betrayed by people she had once called friends...couldn't stop crying on the way to work...felt they had stripped her of her dignity.... She left her job a year later and was out of work for three years.... For nine months...didn't go out of the house....
    In this era of downsizing, as more men and women are compelled to work longer and longer hours,...her experience is part of a growing phenomenon....
    Male executives...have always invested heavily in their work, to the point of ignoring their families, until they become ill, or their wives unexpectedly ask for a divorce. What's new about this phenomenon...is its emergence among women workers and on so many job levels - secretaries, bank tellers, computer programmers, business managers, and professionals.
    [This is typical of the last phases of a pre-Depression era and was commonly seen in the second half of the 1920s. Here's the pattern and it's high time we got wise to it -
    [Top executives unilaterally break the social contract and then blame employees for starting class warfare. But they can do this and get away with it in the first place because a huge, growing, and officially denied labor surplus has developed throughout the economy, thanks primarily to massive technological efficiencies and the lack of an automatic mechanism to pass along the benefits to the population at large in terms of additional free time. Without such a mechanism, the efficiencies get passed along as more unemployment and dependency and desperation. The desperation manifests back among those still employed as increasingly slavish behavior in all sorts of forms, chiefly unpaid overtime, none of which has any guarantee whatsoever that it will succeed in its attempt to clinch job security.]

    12/23 Reebok to take $10m charge in fourth - Move partly related to layoffs of 100 in Stoughton as company, footwear industry face continuing woes, by Chris Reidy, Bos Globe, D1.
    [Plus Reebok 500 layoffs elsewhere, WBUR 10 am News.]
    ...Because of the layoffs [over the past three months], the staff at headquarters now numbers about 1,800 employees. Layoffs were "across the board," from the executive suite to administrative help, said a company spokesman who declined to identify any of the names of those who lost their jobs.
    [If layoffs are so great, how come they won't tell us their names? They're not great, and those who get laid off are often ashamed, even though it's not their fault. An outplacement counsellor says that some executives who get laid off don't even tell their families but come to work at her outplacement office 9 to 5 looking for another job as if they're still working. It's pathetic. Grown men cry in front of her almost every day.
    [Isn't Reebok, like Nike, one of the companies that has been sending jobs to Indonesia and other low wage countries? They're downsizing and alienating their own best markets in America. If running shoes aren't made in America anyway, why not just buy the cheapest and play the same short-sighted, US markets-shrinking game as all these short-sighted CEOs?]

    12/17 Polaroid to fire 700; top executive quits - For Cambridge company, woes come from as far as Russia, as near as own marketing unit, by Ronald Rosenberg, Boston Globe, B17.
    ...The elimination of 600 to 700 jobs, or up to 7.6% of its payroll, is expected to take 12 to 18 months. It follows January's announcement of a reduction of 1,800 jobs. The combined cuts will leave the pioneer of instant photography with about 9,000 employees at the end of this year - down...from 12,000 five years ago and significantly below the 21,000 employees Polaroid had in 1983.
    [Polaroid could break out of this death spiral by changing only its workweek, not its workforce, skillset, morale and best market (its own employees and their families). A 7.6% reduction in its workweek would leave all of its employees, including the marketing department and top executives, with a highly prioritized workweek of 36.96 hrs/wk.
    [Polaroid used to be a good company for employees with lots of innovative programs. How come they aren't in the vanguard of timesizing, not downsizing, like Nucor and Lincoln Electric?]

    12/17 Ergo Science slashes work force by 50%, Bos Globe, B27.
    ...citing the Food and Drug Administration's rejection of its Ergoset tablets and Johnson & Johnson's termination of a collaboration agreement for that drug.... On Sept. 30, Ergo Science...had about 60 employees.
    [Here we have the case of a company "in extremis." Next century this will still be handled by cutting the workweek rather than the workforce - unless the % cut in question brings the workday below a referendum-determined minimum, in which case the troubled firm will be allowed to cut employees.]

    12/16 Citigroup to slice 10,400 jobs - Newly merged firm seeks to boost profits, by Peter Gosselin, Bos Globe, C1.
    NEW YORK - ...The firm, formed this year through the merger of Citicorp and Traveler's Group Inc., will take a $900 million charge to pay for the 6% staff cut. The company is scrambling to make good on forecasts of its cochairmen Sanford Weill and John Reed to boost profits of the combined operation by $1 billion within two years.
    [Here's a case in point of the connection between mergers and layoffs. Imagine cochairmen Weill and Reed being too dim to get efficiency without cutting their own markets - and paying $900m to make those market cuts too! Dim-dumb.
    [They could be cutting their workweek by 6% (to 37.6 hrs/wk) instead of their own best customers, their employees. But no, they're following the herd of other lemming executives toward the cliffs. 1919-1928 revisited.]
    Citigroup executives said in September that they were considering cuts of 8,000 jobs, but apparently concluded that deeper cuts were needed. About 35% of the cuts will be from the US work force, with the rest overseas....
    [How the hey do they think they're going to boost profits by deeper cuts in their own best markets, their US and overseas staff? Growth by shrinkage? Weill and Reed, wake up!]
    When the merger was unveiled, Weill and Reed said they believed they could increase revenues by selling Traveler's insurance and brokerage services from Traveler's Salomon Smith Barney subsidiary to Citicorp customers. But trading losses after Russia's August default and devaluation and internecine warfare between executives of the merging companies have forced the firm to focus on cost-cutting rather than revenue-boosting to raise profits.
    [Ah, if you guys can't figure out how to boost revenues, and the only way you can think of to cut costs is to cut markets, maybe you better focus on just holding the line on profits for awhile instead of trying to raise them.
    [And while you're "on hold," why don't you guys make up your minds what business you're in - banking, selling insurance, stock brokerage, or day trading?
    [And as for being "forced" into cost cutting, there's a lot smarter way to cut costs than cutting staff and keeping the same old "face time" workweek of 40 hours plus. Give your people an incentive to prioritize - cut hours. Now you've still got your same old featherbedding, plus demoralization, minus quite a few skills that you're going to find out you needed after all, and minus a chunk of goodwill and market share.]
    The company ousted James Dimon, president of the Salomon Smith Barney unit...in the wake of the trading losses, which totaled more than $1 billion.
    [So, an executive loses $1b on the biggest market downturn since 1987, and you fire him plus 10,400 units of your own wider markets. Real smart. That's like selling at the bottom. Or what my grandma used to call "cutting off your nose to spite your face"! You guys need to look at how some really smart executives run their companies at Nucor and Lincoln Electric.]

    12/12 Last computer maker in state near bankruptcy, by Jerry Ackerman, Bos Globe, F1.
    Massachusetts' last computer manufacturing company, Nexar Technologies Inc. of Southborough, is preparing to declare insolvency.... The company...has reduced its payroll to 23 employees from 80 in June.

    [Hey, it's getting close to Christmas - when are you hatchetmen going to let up? -]
    12/11 MCI WorldCom to lay off 1,850 - Cuts are part of plan to save $2.5 billion, Washington Post via Bos Globe, B27.
    [Hey lookee that! The Globe is burying the whole Business section now in the middle of the Metro section. Don't want to stir up too much fury about our corporate kamikaze's!]

    12/11 Malden Hospital slated to become outpatient clinic, by Alex Pham, Bos Globe, B26.
    In a major reorganization emblematic of consolidation in the hospital industry, Hallmark Health yesterday announced plans to fold all 106 beds.... The moves, which will...cost $50 million [wasn't this supposed to save money?], also involve a reduction of 350 to 450 full-time jobs, or about 12-16% of the 2,800 positions in Hallmark's four facilities. Hallmark officials said they will rely on attrition [over the next 18 months] to minimize the number of layoffs.
    [Why don't they just rely on cutting the workweek instead of the workforce? Let's see, 12-16% - call it 14%. 14% shorter workweek and pay is a 34.4 hour workweek - welcome news for many overwrought parents = timesizing, not downsizing. And besides, "Hallmark officials," it's easy to downsize. It's much harder to run it right. This was the message in the great movie on commercial TV the other night - "Christmas in my Home Town" with Melissa Gilbert.]

    12/8 Lear to cut 2,800 jobs, close [18] plants, Bloomberg via Bos Globe, C2.
    ...about 5% of its 60,000 workers...in a previously disclosed plan to reduce its own markets in North America and Europe - [oops, that's] reduce costs [not "reduce its own markets"].
    Oh that's all right then if the plan was "previously disclosed" - no problem, go right ahead and take more hemlock, but here, have some more happytalk first -]
    The restructuring was prompted by the need to cut costs after Lear's rapid growth...during the last two years.
    [Yes, this is a "need" - you have absolutely no choice. Unless, of course, you cut your workweek 5% instead of your workforce. Let's see, that would bring everyone (starting at the top) down to 38 hrs/wk and force everyone to prioritize, communicate and cooperate more fully. Nyaa. Dumpster those weaklings and get that Rambo Rush!]

    12/8 Chain plans [400] layoffs, store closings, Bloomberg via Bos Globe, C2.
    Liz Claiborne Inc. said it's closing 30 of its 230 stores and firing...about 5.7% of its work force, as the number one seller of women's career clothing struggles with lackluster sales and earnings.
    [Too many career women getting laid off or shoved into McJobs, mayhap? Well, you claybrained executives have just chopped your own market further, by 400 wage earners and their dependents and friends, who are going to look more favorably on the little neighborhood store (and thrift shops) from now on.
    [Too bad, you could have simply cut hours and wages 5.7% to a 37.7-hour workweek (starting at the top) and gained incredible employee morale and loyalty. But God Forbid you should tamper with the Sacred 40-Hour Work Week that He Gave Moses on Mount Sinai. Far better to throw people out of their jobs - right, guys?!]

    12/8 UAM [United Asset Mgmt] to trim 12 jobs from marketing branch, by Lynnley Browning, Bos Globe, C11.
    [More geniuses downsizing their marketing dept. - wouldn't a cyanide pill be quicker?]

    12/7 20,000 More Job Cuts For Deutsche Telekom, AP via New York Times, C9.
    BONN...Since Jan. 1, Deutsche Telekom has reduced prices and cut 40,000 jobs to compete with a growing number of rivals after Germany liberalized its telecommunications market to meet European Union standards.
    [Who can tell the difference these days between economic "standards" and suicide? These morons will make their economies disappear to make a single currency appear.]

    12/7 Downsizing Comes Back, but the Outcry Is Muted - Rather Than Protests, Unions Are Offering Transition Advice, by Louis Uchitelle, NYT, frontpage.
    ["No, no, don't let us put you to any trouble. We don't want to be a burden. Oh yes, it is a nice day and the economy is SO healthy. Now, let's see, this line for the minimum wage jobs, this line for food stamps, this line for temporary unemployment- welfare, this line for room&board&health insurance (called p-r-i-s-o-n) and this line for the Kevorkian clinic?"
    [Tells personal stories of downsizings and rehirings at lower pay in services. Note two charts -
    Annual layoff announcements 1989-98 thru Oct. - roughly 101, 303, 550, 500, 606, 505, 450, 490, 450, 505 thousand, versus
    Annual average nonfarm jobs created 1989-98 thru Oct. - roughly 2700, 1500, (1100), 300, 2200, 3400, 3000, 2300, 3100, 3700 thousand
    [Yes yes, we know, it's OUR fault. But first, a few questions...
    [How many layoffs are not announced? How many of the jobs created are estimates? How many of the jobs created are part time? How many of the jobs created are equivalent in wages and benefits to the jobs lost? The article basically admits that -]
    The new jobs are out there, but most pay less than the old ones.
    [However, so desperate are the media and the top executives to spin a robust economy that no one has yet developed comparable figures. We're still comparing apples and oranges, and meanwhile we have the second biggest prison population in the world, second only to Russia's, and greater than that of China's, even though China has four times our population. CEOs of America, why not speed up the process and re-legalize slavery? Project downsizing and you get two people left working 12-hr days supporting billions of people disabled or in prison. Project timesizing and you get everyone working a little and supporting themselves at a good standard of living.]

    12/3 J & J plans to cut 4,100 jobs - Medical device, drug firm to take charge of $800 million, citing sluggish sales, Bloomberg News via Bos Globe, E2.
    NEW BRUNSWICK, N.J. - Johnson & Johnson, the world's fifth-largest drug maker...also the world's largest maker of medical devices, said it will close 36 plants, fire 5,800 employees, and hire 1,700.

    12/3 US companies boosting productivity [but not production] by slashing payrolls [and markets], AP via Bos Globe, E3.
    [Here our dumb&dumber CEOs are focused on an accounting trick to get a quick rush. Consumption is flagging all over the world, over-production is rampant, and these geniuses are trumpeting about productivity because what really matters, production and sales, are both down and there's no other way to put a good face on it.
    [Note - this obsoletes the myth that "technology creates more jobs than it destroys." (= Say's Law for the information age.) Can we PUHLEEZ have an end to the parrotting of that one from now on?! Clearly the only way that one was kept alive was by technology injection and featherbedding in one phase, then reorganizing and downsizing in a second phase that was presented as totally separate from the technology injection - so the automation wouldn't get blamed and resisted (luddism) next time. Instead, "market forces" would get blamed - "globalization," "Asian flu," whatever - as long as it's an "act of God" that can be blamed neither on management nor on technology.]
    Productivity of nonfarm, nonsupervisory workers - measured as output per hour of work - grew at a 3% seasonally adjusted annual rate in the July-September quarter, even better than the 2.3% rate reported in an initial estimate last month. Economists said yesterday's report from the Labor Dept. shows that businesses, especially manufacturers, have been quick to economize to preserve profit margins [and executive pay] threatened by the loss of export sales to Asia and other economically troubled parts of the world. A case in point is Boeing Co., which said earlier this week it would cut 20,000 jobs, on top of 28,000 already announced.
    [Oh yeah, that's real good news. A number of people equal to the size of a small city lose their self-supporting livelihood thanks to management stupidity and we're supposed to rejoice.]
    Many businesses can't increase prices because of competition from exports.
    [Aren't these the same guys that were clamoring for free trade a few years ago? Well, they got it and now they're using it for just another excuse for their own incompetence. Even if we had no exports, but still had downsizing, they would not be able to raise prices. Why not? Because they would soon have downsized their own markets to "economize" as technology poured in, and with smaller markets, you've got to lower prices to maintain sales, not raise them.]
    Nor can they cut wage increases because with unemployment near a 28-year low, it's difficult to retain qualified employees.
    [Ah, anybody ever heard of ... training? Ever heard of ... on-the-job training alias OJT? It was everwhere in World War II when we had a real labor shortage. How much are these big boys going to have to hurt before they get off their big fat butts, quit complaining, and spend some of their astronomical pay and TRAIN people?]
    What they can do is keep payrolls lean.
    [No they can't. Because lean payrolls mean lean markets. As Reuther said to Ford when Ford said "Let's see you unionize these robots" - "Let's see you sell them cars."]
    That was illustrated by a separate Labor Dept. report showing the number of first-time applications for unemployment benefits rose by 12,000 to 313,000 last week.
    [Oh so we're "playing the float" between when we trigger massive unemployment and when it shows up in the "28-year low" unemployment rate? - real smart! God, this article is an exercise to see how much we can partition our brains as we read through just four short columns!]
    "Manufacturers cut workers faster than output and as a consequence productivity surged," said economist Joel Naroff of First Union Corp. in Philadelphia.
    [Oh, so we're "playing the float" between cutting workers and cutting production too - our braindead CEOs have developed Prozac strategy timing. Here's hoping they unload their stocks in time this round - they may not get another chance.]
    "The ability to squeeze more out of the work force is the key to controlling labor costs."
    [But notice that executive labor costs are never factored into the equation because the only "productivity" we're looking at is, see above, "productivity of nonfarm, nonsupervisory workers." The game is rigged so that executives are always and only unaccountable. They can destroy their companies and their economies and never feel pain. Some feedback system! Some cybernetics! They drift on and on toward a mega economic Jonestown and it's "Don't worry, be happy!" Let's see some indexes that track supervisory productivity and top executive productivity and overall inclusive productivity - betcha that would be some wake up call. Meanwhile, lull a bye my leetle executives, lull a bye, lull a byebye.]
    The number of jobless claims reported for last week was still below the level in early November. However, a four-week moving average, which smoothes fluctuations in the volatile data series, rose by 250 to a seasonally adjusted 319,250. That was the highest level since July.... Workers receiving continuing unemployment checks totaled 2.31 million during the week ended Nov. 21, up 127,000. Excluding the GM strike [in July], both numbers are the highest in 10 months.
    "It appears laid-off workers are having a tougher time finding employment," said economist Karen Dexter of Merrill Lynch in New York. [No kidding, Karen.]

    12/02 The biggest combination yet - Exxon to buy Mobil for $74b, by Peter Gosselin, Bos Globe, p. 1. ...Analysts predicted
    layoffs of up to 20,000 workers, or more than 15% of the companies' combined work force of 123,000
    [ALTERNATIVE = a 34-hr company-wide workweek to share the work and SAVE jobs, skills, morale and markets]

    ..\..America's biggest oil company said yesterday it would buy its No. 2 rival in a deal that would reassemble key parts of...Standard Oil...to cope with a worldwide oil glut....
    [Folks, this is yet another installment in the on-going saga titled "America's suicidal CEOs - Their reaction to glut worsens the problem." Here will be 20,000 unemployed people, and their dependents, and those of their friends whom this shocks, who are going to start trying to save money by driving their cars as little as possible and using as little gasoline as possible. How far does this have to go before the big boys start waking up and weakening the crisis by downsizing their worktime - everyone's, starting with theirs - instead of their workforce dba their best customers.
    [A 15% workweek reduction including a parallel paycut would bring the Exxon-Mobil workweek down to 34 hrs/wk and keep the mergers' skill set intact. If the big boys did it too, they would save so much money on bloated executive salaries and perks that they'd probably just need a 14 or 13% reduction for everybody else - and they'd have something they do not have now - a FEEDBACK system - in place of their self-woven isolating cocoons. Everyone would keep their jobs. No one would go into shock and start cutting down on driving and on every other form of spending. When do you boys think employment reduction is going to stop? You are reassembling Standard Oil - are you going to reassemble the Great Depression as well?......]
    If consummated, the combination would break all sorts of records: In a year of record-breaking mergers, it would be
    - the biggest of them all, topping its closest rival, the $72 billion Citibank-Travelers deal. It would create
    - the largest publicly owned energy company in the world, surpassing Royal Dutch/Shell Group, and
    - the largest publicly owned company in the world, vaulting past General Motors.
    [Time to remember E. F. Schumacher's wise words, *Small is beautiful. But then, since these boys are downsizing their own markets, they soon will be smaller - much smaller.]

    12/2 [Gas] station operators face uncertainty, by Steven Wilmsen, Bos Globe, C1.
    ...Few Exxon and Mobil stations compete for customers [but if this info comes from the companies, maybe it's as reliable as the "Dont' believe the merger rumor" email that Mobil sent out to its dealers just hours before they announced the merger], so few stations are likely to disappear in cost-cutting measures or government antitrust actions because of the deal.... Still, under the surface...big changes...could...weed out certain kinds of stations, as the two companies merge very different corporate philosophies.... Rent, for example, could go up for the vast majority of gas station operators who lease their stations from the company. Exxon charges as much as three times the rent that Mobil does.... Franchisees...already are facing one of the most difficult times in recent memory because of flat demand and sinking oil prices, which the Energy Department said hit historic lows. The merger...comes in a year when four of the nation's largest oil companies already merged into two....The first [stations] to go could be the few remaining neighborhood stations that have not converted from old-style mechanic bays to the highly profitable convenience stores.

    12/2 Friendly Ice Cream closes plant in Ohio, Bloomberg via Bos Globe, C7.
    About 180 jobs will be lost. Stan Phillips, plant administrator, said...employees willing to relocate might be offered jobs at the plants in York [Pa.] and Wilbraham [Mass.].

    12/1 Boeing expecting to cut 48,000 jobs by the end of 2000, item on WCRB radio news, 6:30 pm, 102 FM Boston.
    [This is a ricochet from the Asian crisis. Consumers are cutting travel in Asia and Asian airlines are cutting plane orders.]

    12/1 Volvo to cut 5,300 [Swedish] jobs to pare costs by $367m, Bloomberg via Bos Globe, C2.
    ...as demand for cars slows.... The move...will shrink its work force by 7.3%....
    [OK, why not just shrink your work week by 7.3% (to 37.1 hrs/wk based on a 40-hr standard) and keep everyone employed, as Volkswagen did in Germany a few years ago? You geniuses at Volvo have just laid off 5,300 of your own best customers and salespeople. Dumb dumber dumbest.]
    Volvo is battling recession in Asia, where it sells 6% of its cars, and slower growth in Europe and the United States.
    [Well, this will definitely give you brilliant strategists slower growth in your home markets in Sweden.]
    Volvo is counting on the job cuts to help it reach growth and profit goals.
    [Well, see our comments on the next article on the subject of trying to grow by shrinking.]

    Click here for downsizing stories in November/98.

    Click here for downsizing stories in October/98.

    Click here for downsizing stories prior to Sept. 30/98.


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