On a single day, tens of thousands of jobs are eliminated at Caterpillar, Sprint Nextel, Pfizer, Home Depot, and General Motors
By BusinessWeek Staff and Wire Reports
The beginning of the workweek brought another round of bad news for U.S. workers, as several major companies announced layoffs totaling in the tens of thousands. Adding to the discouragement, labor market experts said that more layoffs are likely in the near term.
"We are very early in the cycle," said Peter Morici, a professor at the Robert H. Smith School of Business at the University of Maryland. "We are going to see the fury of the Old Testament for what we have done to the economy."
Among the cuts announced on Jan. 26:
Caterpillar (CAT), the world's largest maker of mining and construction equipment, announced 5,000 new layoffs on top of several earlier actions. The latest cuts of support and management employees will be made globally by the end of March. The company says it is in the process of shedding about 20,000 jobs. The company employs 112,000 worldwide.
Wireless phone carrier Sprint Nextel (S) said it is eliminating about 8,000 positions in the first quarter as it seeks to cut annual costs by $1.2 billion. The layoffs will trim about 14% of Sprint Nextel's 56,000 employees. The company said it is also suspending its 401(k) match for the year, extending a freeze on salary increases, and suspending a tuition reimbursement program.
Pharmaceutical company Pfizer (PFE), which announced a deal to buy rival drugmaker Wyeth (WYE) for $68 billion, said it would cut 8,000 jobs. The cuts will begin in the first quarter and are to be complete by 2011, according to company spokesman Ray Kerins. Cuts will include most departments, from administration and sales to manufacturing and research.
Home improvement retailer Home Depot (HD) said it was shutting down four small units—Expo Design Centers, YardBIRDS, Design Centers, and HD Bath, a bath remodeling business—trimming about 7,000 jobs in the process. The cuts represent about 2% of Home Depot's total workforce.
General Motors (GM) said it will cut 2,000 jobs at plants in Michigan and Ohio and will halt production for several weeks at nine plants over the next six months because of slow sales. The company said the layoffs are part of its efforts to "align production with market demand."
The U.S. economy lost 2.6 million jobs in 2008, and the new year has brought no letup in the pink slips. The recent spate of layoffs represent "structural, not cyclical changes to the economy," said Maryland's Morici. "They're the hallmark of depression."
Morici said we've so far only seen a sliver of the job losses to come and that unemployment will reach 9% by the end of the year—with "no end in sight."
The gloom was echoed by the National Association for Business Economics. In a report issued on Monday, the organization said job losses accelerated in the fourth quarter, with about 44% of reporting companies cutting payrolls while only 14% added workers. The group said business conditions were the worst since it began its survey in 1982.
The group said that 39% of companies plan to reduce payrolls over the next six months, while 17% plan to increase employment. The only increase in jobs came in the services sector.