Layoffs return with a vengeance as large companies cut again
Nov 10th 2009 9:30AM
Updated Dec 3rd 2009 1:52PM
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.