MGM Resorts Slashes Employee Numbers to Cut Labor Costs

  • MGM Resorts International begins implementing plan to cut labor costs by $100m (€89m)
  • 254 individuals have been let go within the company, with more job losses to come
  • Job cut initiative was announced in January to boost operating cash flow
MGM Resorts International is making 254 employees redundant.
MGM Resorts International is making 254 employees redundant, with more job cuts expected to come.

Last January, MGM Resorts International announced a job cuts initiative that would see labor costs reduced in order to boost the company’s operating cash flow. The goal is to increase the cash flow by $200m (€178m), or into the billions range by 2020.

The plan has now been put into action as more than 200 individuals lost their employment in late April as cuts began.

Redundancy Program Implemented

As the month of April came to an end, MGM Resorts International decided to make 254 individuals redundant. The company expects to let more employees go in the next few weeks. The actual number of employees facing redundancy is unknown.

The company has already accepted voluntary resignations by top executives as part of the job cut initiative. Individuals who decided to resign include the former MGM grand president Scott Sibella and former CFO Dan D’Arrigo.

CEO Jim Murren said: “I know this day is going to be difficult for everyone. I also know that changes like this can be stressful and I regret the impacts on the individuals whose roles are being eliminated.

“We would not be taking these steps if we did not believe they were necessary to serve the long-term interests of the company.”

According to MGM Resorts, the job cuts last month affected only managers. Employees who lose their position within the company will be offered career transition services. It is unclear as to how much the company will save based on the recent cuts. It has been implied that it could be as much as $13m a year, although MGM has not revealed an exact number.

Pressure From Investors

Pressure from investors has resulted in MGM Resorts working to improve earnings as well as increase its share price. The company’s shares have underperformed within the overall market within an eight-month time frame.

Since August 2018, the shares have fallen by 12%. Trading in late April saw shares fall $0.055 cents, 0.2%, to a total of $27.75 (€24.80).

Analysts have found that revenues for the Strip are expected to reach the low single digits over the next few years. For earnings to increase, MGM will have to significantly cut costs.

MGM Resorts International is currently the largest employer in the state of Nevada. In total, the company has more than 54,000 employees.

Robots for Employees

Perhaps the job cuts are a precursor to robots taking over for MGM Resorts employees. According to one of the VSO News articles, the company is considering replacing workers with robot technology in its properties located on the Las Vegas Strip.

The idea will certainly cause casino worker unions in Nevada to take on the issue. Among the employment positions that could be replaced with robotic technology are cashiers and bartenders. Standard payment technology could be integrated and replace the need for human interaction.

Artificial and robotic technology is a growing trend and, with advancements, more jobs will be lost to automation. A report released by McKinsey and Company has estimated that robots could take over 800 million jobs or more on a global scale by 2030.