CHICAGO (AdAge.com) -- In another blow to a large, iconic agency, Leo Burnett USA today eliminated about 75 jobs, or 4% of its work force.
"Certainly, the economic climate is a significant factor behind today's action. With client-revenue projections down for 2009, we were forced to take steps to address the fact that we have had more staffing than our plan can support," Burnett USA President Rich Stoddart said in a memo to staff. "I want to be clear, however, that today's actions are not only a response to today's economic climate. We did not approach these decisions as a purely financial exercise. While doing so may have allowed us to reach short-term objectives, it would not have put us in position for long-term growth and success."
While Mr. Stoddart didn't address which specific clients' cuts were making these layoffs necessary, one motivation is said to be the virtual "evaporation" of work on General Motors Corp.'s Buick brand, which has left a large team of employees on the business all but idle in recent weeks, according to people familiar with the matter.
GM shifted Buick, GMC and Pontiac to Burnett in 2007 in a move that helped the agency achieve 2008 revenue gains touted by its executives. But those moves -- in the context of the agency's inability to score new business on the scale of legacy clients such as McDonald's and Philip Morris -- made the shop more dependent on GM, which has asked for government assistance to stay afloat in recent months.
The layoffs are also merely the latest indignity for the agency, which earlier this month agreed to pay the U.S. Army, a former client, $15.5 million to settle an overbilling lawsuit originally filed by whistle-blowing former Burnett employees. A spokesman said the Army settlement had been accounted for in earlier years and was not a factor in the latest round of layoffs.