Layoffs return with a vengeance as large companies cut again
Filed under: People, Electronic Arts, Johnson & Johnson, Sprint Nextel Corp.
The "Year of the Layoff" was supposed to be over now that the economy is improving and most large companies have fired as many people as they reasonably can. Productivity gains can only squeeze so much out of a shrinking work force.
But American companies are aggressively chopping their workforces again, and that raises the question of whether unemployment will continue to grow at the rate of almost 200,000 jobs per month well into 2010.
Several corporations made deep cuts on Monday. Electronics Arts (ERTS) will let go a remarkably large 17% of its employees, about 1,500 people The company announced that it lost money in the last quarter. EA also spent $275 million to buy online game company Playfish. Sprint (S) laid off 2,500 people Monday as well. The cellular company has been losing subscribers and money. Pfizer (PFE) also said Monday that it would close six R&D facilities and eliminate up to 2,000 jobs.
But troubled companies are not the only ones downsizing. On Nov. 3, Johnson & Johnson (JNJ) said it would cut as much as 7% of its staff, which could be over 8,000 people. That came within a few days of J&J posting profits of over $3 billion and raising its financial guidance for the balance of the year.
It is becoming clear that although layoffs will not return to the levels of the first half of 2009, aggressive job cuts at big companies are not over. A weak holiday season will almost certainly mean that the largest retailers will have to cut costs again. That means their suppliers will face profit pressures as well.
The first quarter of 2010, which is expected to be a time when the economy is roaring back, could prove that rising joblessness is hardly a thing of the past.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
11-10-2009 @ 8:59AM
algon said...
"On Nov. 3, Johnson & Johnson (JNJ) said it would cut as much as 7% of its staff, which could be over 8,000 people. That came within a few days of J&J posting profits of over $3 billion and raising its financial guidance for the balance of the year."
In order for companies to maintain profits with a slowing economy (less sales per qtr), companies tneed to continue cutting costs. Most companies are posting a profit from the employee cuts the made earlier in the year, but as more people are layed off, total sales fall. Companies must again cut jobs to remain profitable in the next upcoming sales quarterly reports. Excecutives bonus is tied to profits, and the vicious cirlce will continue.
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11-10-2009 @ 10:20AM
JIM said...
Algon, I agree. This is all about management and their bonuses. To hell with the economy and "our most important asset (employees)." I nedd my bonus, I need my bonus. Then after all the cutting is done and the company has to file bankruptcy, the management will take away all the stockholders money (stock will be worthless). Then after they emerge from bankruptcy, the management will tell the world what a great job they did of getting this company through bankruptcy and have an IPO with new stock (none to the old stockholders) and management will PAY themselves with millions of shares. WHAT A CROCK.
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11-10-2009 @ 11:47AM
Linda said...
Just boycott these companies forever. You all know they will hire back either the fired workers at much less pay & no benefits or new people at just above min. wage. Research what companies you buy from & make sure its American made. If you can't find the product made here in the US think do you really need it? My husband is a very small business owner who tries like all hell to keep who works for him at cost to us.
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11-10-2009 @ 11:51AM
Rick said...
The nation's U3 unemployment rate will now spiral upwards into an unadulterated nightmare that nobody has bargained for.
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11-10-2009 @ 12:43PM
Ken said...
There are many reasons for unemployment but this article and a number of the postings are on target. Companies will "reduce their workforce" in order to temporarily boost their bottom line, thus protecting executive bonuses. This is not even good for the long-term growth of the company itself, but when the lemmings all follow suit, it is a disaster for employees, consumers, and the economy as a whole.
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11-11-2009 @ 1:14AM
B said...
This makes so much sense to us. Why can't these companies see that.
It is like outsourcing jobs to other countries. It saved the companies money in the short run, but left less money to be spent at home.
I guess foresight is a thing of the past.
11-10-2009 @ 12:51PM
Ernest said...
This is a prime example of cooperate America destroying this country. I will never work for a so call large corporation unless I have a 5 year contract. Mom and pop companies are more secure and more of a family environment. These large corporations only care about the bottom line and it does not matter how many years you sacrifice to build the company up your nothing but a number that’s expendable
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11-10-2009 @ 1:00PM
Sandy said...
scaring small business (500K range) with huge tax increases,fines and health care mandates will not get unemployment to drop. I don't don't even see large corporations hiring any time soon and if they do it will be outsourced to other countries for the same reason. TO HOLD DOWN COSTS. This will be as good as it gets for years. First thing that needs to be done is wipe all of the spending Democrats out of office, this will bring some confidence back to business, investors and consumers but while our congress is spending all the money we have the rest of us will sit on the sides lines and wait for things to stablize which is going to take years, many years.
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11-10-2009 @ 1:08PM
Jonah said...
With unemployment in the double digits - http://debtbeat.com/2009/11/unemployment-tops-10-percent.html - and companies still making massive cuts, the government doesn't have the capacity to stimulate much job growth.
The economy is much bigger than it was in the New Deal era and we're stuck in two wars. The Feds just don't have the leverage to get people working again.
That has to come from the private sector.
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11-10-2009 @ 1:34PM
Jenny Baldwin said...
HOW CAN THEY LIE AND SAY THE ECONOMY HAS IMPROVED AND NOW THERES MORE JOB LAYOFFS. ITS NOT GOING TO GET BETTER. GODS JUDGEMENT IS NOW UPON OUR LAND. LOOK AROUND YOU. THEY HAVE TAKEN JESUS AND PRAYER OUT OF OUR COUNTRY. CHRISTIANS IN OUR OWN COUNTRY ARE BEING ARRESTED AND SENT TO JAIL OR PRISON FOR SPEAKING THE TRUE GOSPEL OF JESUS CHRIST. THIS COUNTRY IS GETTING WHAT THEY ASKED FOR. GOD WANTS US TO COME TO HIM AND REPENT FROM ALL OUR SINS. GOD WILL HEAR YOU FROM HEAVEN AND HEAL OUR LAND. BUT UNTIL THEN WE MUST WEEP AND HOWL FROM THE WILDERNESS
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11-10-2009 @ 4:23PM
Witness of the Truth said...
Jenny, according to God's Law Book, the Bible, it is too late to heal our land. All mankind is under Judgement right now.
On May 21, 2011, the Lord, Jesus Christ will Rapture those that belong to Him. He will also begin to destroy everthing, and everybody, over the next 5 months. On October 21, 2011, Holy God will destroy this earth by fire, to be remembered no more.
Now is the time to plead for mercy. There will be NO MERCY after May 21, 2011.
http://www.ebiblefellowship.com/may21/index.html
11-11-2009 @ 1:40AM
B said...
Witness, Could you please provide me the exact scripture from Gods Law , the Bible where you got this knowledge. I have read it several times and God contradicts your date, or any date for that matter.
And Jenny if you have ever traveled or lived in other countries, you would see that America is not even near the top of the list of breaking Gods laws.
You understand that the bible is for the entire earth and that is a bit bigger than the USA, right?
11-10-2009 @ 1:57PM
JRJ said...
It isn't clear that these cuts are all about efficiency or sustainability over the long term. Looks like more short-sighted liquidation of human capital. Service and quality will deteriorate, so not just the laid-off workers, but the consumers will suffer. If there were really such a thing as "corporate responsibility," the leading companies of this nation would be looking for ways to add value without whacking heads, and to do so in unison, as a team. As it is, they are in effect screwing each other. As each looks to its own myopic interests, it creates waste in the form of impaired purchasing power at the macro level. The only long-term beneficiaries of this mess are the greedy b--tards at or near enough to the top to harvest arbitrage from their options.
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11-10-2009 @ 3:58PM
kevin finnerty said...
Looks like Sprint/Nextel plan to fire customers based on them calling with problems has back fired. Sprint/Nextel we customers have fired YOU...LMAO
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11-10-2009 @ 4:11PM
THH said...
When everybody gets laidoff,who can afford their products?Corporate America is shooting themselves in the foot.When i get laidoff,I won't be buying anything.When will the Obama administration recognize that job creation is key to getting the economy back up and running?
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11-11-2009 @ 12:26AM
Networker said...
Most folks are on target here. The may 21st earth destruction is well a joke. Sprint management cannot seem to get its footing while the rank and file continue to do more with less. In fact in memos this week in the same sentence it said cuts were necessary but we have great momentum and we still need to focus on containing costs but we have great momentum. I don't know about the rest of the industry or workforce but based on what we have seen lately it looks like the third year in a row where there will be no salary increases at Sprint but Executive contracts with yearly increases written in will be honored because, well, it is too much work to renegotiate them. Tell them like you tell the rest of the workforce - take the cuts and no increases or get out! So at Sprint at least, it is probably enough cuts to cover executive increases and bonuses for the next year. Maybe they (execs) will be generous and give their poor employees a 1 percent increase and pat themselves on the back. I wonder how prevalent this is....
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