.Layoffs Spread to More Sectors of the Economy
Furloughs, wage reductions, hiring freezes and shorter hours simply did not do enough. A year into this recession, companies across the board are resorting to mass job cuts.
Home Depot, Caterpillar, Sprint Nextel and at least eight other companies announced on Monday they would cut more than 75,000 jobs in the United States and around the world — a gloomy start to the workweek for employees anxious about holding their own as the economy sinks. Caterpillar, the maker of heavy equipment, is slashing its payrolls by 16 percent. Texas Instruments said late in the day that it would eliminate 3,400 jobs, or 12 percent of its work force.
Jobs began disappearing in home building and mortgage operations early in the recession, then across finance and banking more generally. Now the ax is falling across large swaths of manufacturing, retailing and information technology, taking out workers from New York to Seattle. Just last week, Microsoft announced its first significant job cuts ever.
Because companies like Microsoft have invested in their workers’ skills and knowledge, they usually delay major work force reductions as long as they can. But with orders for new products and services drying up and financing tight, employers are looking to shrink their costs drastically and are slashing their payrolls, anticipating a protracted decline for business in 2009.
Monday’s parade of negative news comes after months of announcements from other prominent companies like Citigroup, General Electric, Nokia and Harley-Davidson. As part of its acquisition of Wyeth, Pfizer said it would cut the combined workforce by 19,500 employees.
On Wednesday, the tally of mass layoffs for December will be released by the Bureau of Labor Statistics. Already, the bureau says the United States economy has shed 2.55 million jobs since the recession began, pushing the unemployment rate up to 7.2 percent last month.
The latest round of job cuts — and the additional rounds likely to come as these move through the economy — mean more pain ahead for states as unemployment insurance claims rise and deplete state budgets.
Congress has proposed setting aside $43 billion to assist the states and to provide for new and current recipients of unemployment checks. That money is intended to increase the weekly benefit amounts; to extend how long people can collect payments; to cover more types of workers, like part-timers; and to help states distribute benefits more quickly.
It is based largely on an estimate that the unemployment rate will rise to 8 to 9 percent this year even with a stimulus package, according to the proposal summary from the House Appropriations Committee. But if unemployment soars into double digits, as some economists expect, the financing may not be enough.
“The economy is deteriorating at a faster clip than even the most dreary forecasts had expected,” said Joseph Brusuelas, an economist who, bucking the current job market trend, will soon start a new job at Moody’s Economy.com. “At the current trend, $43 billion will not be sufficient should we breach 9 percent unemployment and maybe reach into the double digits.”
President Obama cited the layoff announcements in remarks Monday urging Congress to approve an $825 billion economic stimulus package of tax cuts, emergency benefits and public spending projects. “These are not just numbers on a page,” he said. “As with the millions of jobs lost in 2008, these are working men and women whose families have been disrupted and whose dreams have been put on hold.”
Charles DiGisco, of Randolph, N.J., is one casualty of the downturn. He said he had been looking for work since Sept. 18, when he lost his job as a vice president for sales and marketing at Master Cutlery, a knife maker. He frequently hears a familiar refrain from would-be employers: “We would hire you, but we’re not hiring anybody.”
His family’s monthly expenses are four times what Mr. DiGisco collects from unemployment, and he said his family was selling two of its three cars and might dispose of some stocks or dip into retirement funds to keep paying the mortgage.
“It takes me 20 years to save it, and it takes me five months to go through it,” Mr. DiGisco said.
While stimulus spending on public works may take some time to get going, some companies could bring back displaced workers quickly if the government initiative generated new orders.
Caterpillar, for example, had announced buyouts, wage freezes and work stoppages around the holidays because of “a dramatic decline in orders,” said Jim Dugan, a spokesman for the company, based in Peoria, Ill.
On Monday, the company said that a total of 15,000 permanent and temporary jobs, out of about 125,000, would have been eliminated by the end of this week, and that it would trim 5,000 more by the end of the first quarter. Should orders for earthmovers and other heavy equipment improve, which some expect as countries around the world start building bridges, highways and other public works to help create jobs, Caterpillar can recall some workers quickly.
Many companies, though, may not rush to increase staffs even if business begins to pick up. Andrew Stettner, deputy director of the National Employment Law Project, said downturns often motivate companies to restructure business models permanently, meaning jobs they cut now are unlikely to be replaced.
“Structural change is put into overdrive because of the recession,” he said, “so who knows for sure how a company like Microsoft will fare?”
Sprint Nextel, which announced Monday that it was eliminating 8,000 jobs, or roughly 14 percent of its work force, is similarly facing some tough restructuring decisions as it continues to hemorrhage subscribers.
After a dismal holiday shopping season, retailers are letting employees go in droves. More than 66,600 retailing jobs were lost in December, the worst period since the late 1930s.
Home Depot, the home improvement retailer, said Monday it would cut 7,000 jobs, or 2 percent of its workers. Some 5,000 cuts will come through store closings, largely of its upscale Expo chain; the rest will come from corporate support, many at its Atlanta headquarters.
Carol B. Tomé, Home Depot’s chief financial officer, said the company had explored ways to save Expo, but “as we kept looking at alternatives, the business kept getting softer and softer.”
For most of last year, relatively healthy demand for exports gave global companies like Caterpillar a cushion. But with downturns deepening across Europe and Asia, and the dollar strengthening, global demand for costlier American goods has faltered.
“There really isn’t any hiding place for companies anymore,” said Nigel Gault, chief United States economist at IHS Global Insight. “The recent numbers coming in from the rest of the world are disastrous.”
NYT
Home Depot, Caterpillar, Sprint Nextel and at least eight other companies announced on Monday they would cut more than 75,000 jobs in the United States and around the world — a gloomy start to the workweek for employees anxious about holding their own as the economy sinks. Caterpillar, the maker of heavy equipment, is slashing its payrolls by 16 percent. Texas Instruments said late in the day that it would eliminate 3,400 jobs, or 12 percent of its work force.
Jobs began disappearing in home building and mortgage operations early in the recession, then across finance and banking more generally. Now the ax is falling across large swaths of manufacturing, retailing and information technology, taking out workers from New York to Seattle. Just last week, Microsoft announced its first significant job cuts ever.
Because companies like Microsoft have invested in their workers’ skills and knowledge, they usually delay major work force reductions as long as they can. But with orders for new products and services drying up and financing tight, employers are looking to shrink their costs drastically and are slashing their payrolls, anticipating a protracted decline for business in 2009.
Monday’s parade of negative news comes after months of announcements from other prominent companies like Citigroup, General Electric, Nokia and Harley-Davidson. As part of its acquisition of Wyeth, Pfizer said it would cut the combined workforce by 19,500 employees.
On Wednesday, the tally of mass layoffs for December will be released by the Bureau of Labor Statistics. Already, the bureau says the United States economy has shed 2.55 million jobs since the recession began, pushing the unemployment rate up to 7.2 percent last month.
The latest round of job cuts — and the additional rounds likely to come as these move through the economy — mean more pain ahead for states as unemployment insurance claims rise and deplete state budgets.
Congress has proposed setting aside $43 billion to assist the states and to provide for new and current recipients of unemployment checks. That money is intended to increase the weekly benefit amounts; to extend how long people can collect payments; to cover more types of workers, like part-timers; and to help states distribute benefits more quickly.
It is based largely on an estimate that the unemployment rate will rise to 8 to 9 percent this year even with a stimulus package, according to the proposal summary from the House Appropriations Committee. But if unemployment soars into double digits, as some economists expect, the financing may not be enough.
“The economy is deteriorating at a faster clip than even the most dreary forecasts had expected,” said Joseph Brusuelas, an economist who, bucking the current job market trend, will soon start a new job at Moody’s Economy.com. “At the current trend, $43 billion will not be sufficient should we breach 9 percent unemployment and maybe reach into the double digits.”
President Obama cited the layoff announcements in remarks Monday urging Congress to approve an $825 billion economic stimulus package of tax cuts, emergency benefits and public spending projects. “These are not just numbers on a page,” he said. “As with the millions of jobs lost in 2008, these are working men and women whose families have been disrupted and whose dreams have been put on hold.”
Charles DiGisco, of Randolph, N.J., is one casualty of the downturn. He said he had been looking for work since Sept. 18, when he lost his job as a vice president for sales and marketing at Master Cutlery, a knife maker. He frequently hears a familiar refrain from would-be employers: “We would hire you, but we’re not hiring anybody.”
His family’s monthly expenses are four times what Mr. DiGisco collects from unemployment, and he said his family was selling two of its three cars and might dispose of some stocks or dip into retirement funds to keep paying the mortgage.
“It takes me 20 years to save it, and it takes me five months to go through it,” Mr. DiGisco said.
While stimulus spending on public works may take some time to get going, some companies could bring back displaced workers quickly if the government initiative generated new orders.
Caterpillar, for example, had announced buyouts, wage freezes and work stoppages around the holidays because of “a dramatic decline in orders,” said Jim Dugan, a spokesman for the company, based in Peoria, Ill.
On Monday, the company said that a total of 15,000 permanent and temporary jobs, out of about 125,000, would have been eliminated by the end of this week, and that it would trim 5,000 more by the end of the first quarter. Should orders for earthmovers and other heavy equipment improve, which some expect as countries around the world start building bridges, highways and other public works to help create jobs, Caterpillar can recall some workers quickly.
Many companies, though, may not rush to increase staffs even if business begins to pick up. Andrew Stettner, deputy director of the National Employment Law Project, said downturns often motivate companies to restructure business models permanently, meaning jobs they cut now are unlikely to be replaced.
“Structural change is put into overdrive because of the recession,” he said, “so who knows for sure how a company like Microsoft will fare?”
Sprint Nextel, which announced Monday that it was eliminating 8,000 jobs, or roughly 14 percent of its work force, is similarly facing some tough restructuring decisions as it continues to hemorrhage subscribers.
After a dismal holiday shopping season, retailers are letting employees go in droves. More than 66,600 retailing jobs were lost in December, the worst period since the late 1930s.
Home Depot, the home improvement retailer, said Monday it would cut 7,000 jobs, or 2 percent of its workers. Some 5,000 cuts will come through store closings, largely of its upscale Expo chain; the rest will come from corporate support, many at its Atlanta headquarters.
Carol B. Tomé, Home Depot’s chief financial officer, said the company had explored ways to save Expo, but “as we kept looking at alternatives, the business kept getting softer and softer.”
For most of last year, relatively healthy demand for exports gave global companies like Caterpillar a cushion. But with downturns deepening across Europe and Asia, and the dollar strengthening, global demand for costlier American goods has faltered.
“There really isn’t any hiding place for companies anymore,” said Nigel Gault, chief United States economist at IHS Global Insight. “The recent numbers coming in from the rest of the world are disastrous.”
NYT
posted by madtom at 9:39 AM
0 Comments:
Post a Comment
<< Home