May 14--Nike delivered Oregon's latest economic nastygram this afternoon, announcing plans to lay off 1,750 employees worldwide, including 500 at its headquarters near Beaverton.

The shoe and apparel company has been planning a massive restructuring since February, but today's cutbacks -- 5 percent of the company's global work force -- are even larger than Nike had forecast last winter. Oregon will be especially hard hit, with a little more than 7 percent of the 6,800 workers at Nike headquarters losing their jobs.

Laid-off employees will be notified individually over the next few weeks, said company spokeswoman Erin Dobson.

"It isn't necessarily an exercise about cost-cutting," Dobson said. "It's about realigning the business for the future."

Nike's sales have actually held up fairly well during the recession, growing consistently until its last quarter. But profits fell by nearly half during the most recent quarter.

Overall, Nike's business is strong, according to Christopher Svezia, a New York investment analyst who follows the company for Susquehanna Financial Group. But following years of steady growth, Svezia said the company has evidently decided to shift focus in light of the recessed economy.

Nike expects the restructuring to save the company up to $225 million, according to Svezia. It hasn't said what it plans to do with that savings, but he said the company may try to expand in fast-growing countries such as China or experiment with new retail strategies.

"Nike is a growth company," Svezia said. "They need to spend to generate growth."

Today's layoffs are Nike's first since 1998 and 1999, when the company cut about 2,500 positions. Nike has been cutting costs since last year, when it froze hiring, cut travel spending and slowed its retail expansion. Last month, the company laid off 17 at its employee store in Beaverton.

During this round of cuts, Dobson said Nike will be laying off employees across all categories and in every type of position.

"We took a really good look at how the organization needed to look and then matched up with that," she said.

Severance packages will be "robust," Dobson said, but she declined to specify the range of benefits employees will receive. At a minimum, she said, employees will receive two months of pay and certain benefits. Additional benefits will depend on length of service.

Nike is the largest company based in Oregon and one of only two Fortune 500 companies with its headquarters in the state. Its layoffs are only the latest in a series of large-scale job cuts that helped bring Oregon's jobless rate to 12.1 percent in March, the second highest in the nation after Michigan.

Earlier this year, for example, Monaco Coach Corp. laid off 2,000 in Coburg as the recreational vehicle manufacturer slipped into bankruptcy. And there are more hard times ahead: Sometime before the end of the year, Intel plans to close a Hillsboro factory that employs 1,000.

Oregon's state economists issue an updated state revenue forecast Friday, which is widely expected to reflect further deterioration in the state's income tax base.

Additionally, Oregon labor economists have indicated they expect the state's jobless rate is likely to rise when April's unemployment numbers come out Monday.

Nike's share price rose $1.43 today, closing at $50.95 before the company announced its job cuts. In the last year, Nike shares have traded as high at $70.28 and as low as $38.24.

Today's layoffs may not be the end of the cost cuts at Nike, according to investment analyst Sara Hasan, who follows Nike for McAdams Wright Ragen in Seattle. The company is always looking for ways to get more efficient, she said, and the pressure within the business is especially acute during the recession.

That doesn't necessarily mean more layoffs, though. Hasan said Nike might look at ways to improve its supply chain, or reduce waste in shoe design.

"If things continue the way they are," she said, "I would not be surprised to see them look for other ways to cut costs."

-- Mike Rogoway; mikerogoway@news.oregonian.com

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