That move may save them money this year, and the other workers will pick up the slack for the short term. In the end though, workers get tired of over working and they leave. Then you have high turnover in a position, because everyone will eventually feel that way.
American workers are the peak of effeciency and work more hours (per week) than anyone in the world. We also have less vacation than any industrialized nation.
So your claim that just joining entities together, having one of the staff cover both of them and lay off the rest -- is -- well -- silly. It is how my company handled the last downturn and it worked out well for one year. Then we lost 20% of our staff when they went and got more satisfying jobs elsewhere. Then we hired a slew of temp-quality workers (because, after all management always minimizes the skills required for a job) and our quality is atrocious now. I mean HORRIBLE. Our schedules have slipped and now the company is talking about losing money on the missed schedules and cost of supporting low quality.
Just because it takes 9 months to have a baby, doesn't mean you can have 9 people on it and get a baby in 1 month. Management and administrators get lost in the numbers and forget the rest. It is amazing.