BLOODY MONDAY AS LAYOFFS TAKE BIG TOLLgreenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread
BLOODY MONDAY AS LAYOFFS TAKE BIG TOLL
Tuesday,January 30,2001 By PAUL THARP
Chrysler sent the job market reeling yesterday by slashing 26,000 jobs and shuttering or reducing 13 factories - the biggest corporate cutback in a decade. The downsizing dug deeply into the industrial heart of Detroit and set the stage for a flood of other mega downsizings from the slowly crawling economy.
"Chrysler's action tells you the dire straits the labor market's in - we're expecting these kinds of mega layoffs to increase elsewhere," said John Challenger, president of Challenger, Gray & Christmas, an outplacement firm that tracks downsizings.
DaimlerChrysler, Chrysler's parent, plans the 20 percent reduction over three years. Of the total, 4,300 jobs were cut in Canada and 3,100 in South America.
DaimlerChrysler is trying to soften the impact of an expected $1.75 billion loss for the second half of 2000.
Despite record vehicle sales in the U.S. last year, Chrysler's fortunes were worse than expected because the American economy slowed faster than anticipated.
The company also stumbled in launching new versions of its key Dodge and Chrysler minivans, forcing it to spend hundreds of millions of dollars on incentives.
DaimlerChrysler fell here 95 cents to $47.29.
Other major layoffs also emerged elsewhere but took a back seat to the Chrysler bloodbath.
OfficeMax, the embattled office supply chain, said it's closing six stores in New York - 50 nationally - and eliminating 1,200 jobs, or 3 percent of its payroll. Its stock jumped 10 percent to $3.73, up 36 cents.
At America's biggest maker of bedding and bath towels, WestPoint Stevens, executives are closing a South Carolina factory and cutting 468 jobs, about 2.8 percent of its work force. Its shares rose 24 cents to $9.25.
Another Internet provider, Convergent Communications, also took a major hit - slashing 22 percent of its work force. Convergent is closing five offices, eliminating 160 jobs and selling its telephone unit to keep from sinking.
Companies are quick to respond to sagging sales and profit shortfalls by immediate downsizings, experts say.
"These are times that companies must take immediate action. CEOs are on a very tight leash of Wall Street," said Challenger.
"Wall Street will not suffer any drop in earnings. If earnings go down, you must immediately cut costs or your stock will be taken out to the woodshed."
As layoffs spread into other industrial sectors yesterday - from plate glass to chemicals - many younger workers were pulled down into the dumps by the prospects of going through their first recession and layoffs.
Job counselors say that workers in their 20s -the so-called Bull Babies - have had only good times in the long bull market and aren't used to such setbacks.
"The jobs market has been hot for so long, many people tend to forget how bad it once was," said Challenger. A decade ago, unemployment was about 7 percent.
But last month was one of the best months on record for having a job, with unemployment at 4 percent in December - the lowest level in 30 years.
That's likely to change soon.
"There is nothing to suggest that the downsizings will slow," said Challenger. "There's a serious question whether this hot jobs economy will persist."
He said most big companies are looking at job cuts, if they haven't already taken actions, including General Electric.
GE Chairman Jack Welch has said there would be "significant" job cuts, rumored to be in the range of 60,000 to 70,000, a near record. GE already has slashed 24,000 of that amount by announcing the closing last month of its retail chain Montgomery Ward.
The biggest single layoff came in the recession of 1990 when General Motors fired 72,000. Last month, GM fired 15,000 by closing its Oldsmobile plant.
-- Martin Thompson (firstname.lastname@example.org), January 30, 2001
A Canadian technology company called JDS Uniphase is announcing layoffs today, too, but, as usual, I have not yet been able to find an online article. And, have the recent Xerox layoffs been listed anywhere here?
-- Rachel Gibson (email@example.com), January 30, 2001.
I read a few years ago that someone had proved mathematically that if the GNP does not exceed the prime rate, the economy is moving backwards. If this is true this economy has not grown in years. Maybe one of the readers of this board can help with the name of author of this proposition.
-- David Williams (DAVIDWILL@prodigy.net), January 30, 2001.
Rachel, here's what today's NY Times has on Xerox:
Headline: Wider Loss at Xerox [excerpts]
Source: New York Times, 30 Jan 2001
The Xerox Corporation reported a fourth-quarter loss yesterday that was slightly larger than analysts' estimates, and said it would eliminate 4,000 jobs to help cut costs.
Nevertheless, investors seemed relieved that the news from the financially troubled company was not worse. Last fall, the company was fending off rumors of its impending bankruptcy.
Shares of Xerox closed at $7.94, up $1.07 a share. The stock is up more than 70 percent since the start of the year...
In a conference call with Wall Street analysts, the chairman of Xerox, Paul A. Allaire, said the company expected to lose money in the first quarter this year. After that, Mr. Allaire said, Xerox's financial condition would improve through the balance of the year. "We feel good about the progress we are making," Mr. Allaire said. "Our turnaround is on track." ...
In addition to cutting costs, Xerox, which at the end of last year had $16.4 billion in debt, is raising cash by selling assets...
Xerox improved its liquidity during the fourth quarter, but its business deteriorated. Total revenue for the quarter fell to $4.8 billion, from $5.5 billion in the quarter a year earlier. Equipment sales for the period were $2.7 billion, down from $3.3 billion.
"Top line revenues were worse than I expected," said Caroline Sabbagha, an analyst at Lehman Brothers. "Xerox has to get the cash and pay off debt to make sure it meets its cash obligations this year. But cost- cutting is probably not enough for Xerox to begin a turnaround." ...
Mr. Allaire said he expected Xerox to return to profitability this year "even if the economy and the competitive environment preclude any revenue growth" in 2001.
As regards JDS Uniphase, I just checked their website at www.jdsuniphase.com and the only relevant recent item I see is a profit statement from 25 January (*.PDF format), no mention of layoffs at a quick glance.
-- Andre Weltman (firstname.lastname@example.org), January 30, 2001.
Xerox layoffs posted in Layoff III
-- Martin Thompson (email@example.com), January 30, 2001.