Large corporation layoff announcements total over 120,000 in the first half of January. Heading up the list, in a move that will affect 30,000 or more jobs for good, Circuit City to shut down all U.S. stores
Bankrupt electronics retailer Circuit City Inc. said Friday it will close its remaining 567 U.S. stores and sell all its merchandise. The company said it has 34,000 employees.
“This is very significant. It shows you how bad things are for the retail industry,” said George Whalin, president and CEO of Retail Management Consultants.
NPD Group’s retail analyst Marshal Cohen warned that no retailer is “sacred” in this environment unless “you have a service model that differentiates you from the competition and keeps pace with changing needs of the consumer.”
What’s more, Cohen said Circuit City found itself in the unfortunate position of becoming the “monkey in the middle” as Wal-Mart (WMT, Fortune 500) aggressively moved into the electronics market with its low prices model, and Best Buy continued to widen the gap with its competitors and dominate as the industry leader.
“Circuit City just got stuck in the middle for too long,” said Cohen.
Circuit City is only one of dozens of large employers announcing major layoffs as Brutal Job Losses Continue In 2009
The job market is off to a terrible start this year, with companies announcing more than 80,000 job losses so far, in one of the most painful symptoms of the ongoing recession.
Circuit City Inc. is the biggest culprit of 2009. The bankrupt retailer said on Friday that it is shutting down because of dried-up consumer spending and liquidating its 567 U.S. stores, dooming some 30,000 jobs.
Also on Friday, the Hertz (HTZ, Fortune 500) rental car company said it would cut 4,000 jobs in the first quarter, because of decreased demand for its cars. Japanese auto maker Honda Motor (HMC) said it would cut 3,100 jobs and healthcare company WellPoint (WLP) said it would slash 1,500.
Other massive job cuts from this week include electronics producer Motorola (MOT, Fortune 500), with 4,000 cuts, finance firm Barclays, with 2,100, and packaging company Meadwestvaco (MWV), with 2,000.
These announcements come on the heels of the devastating news that the U.S. economy lost 2.6 million jobs in 2008, making it the worst year since 1945. This brought the annual unemployment rate up to 7.2%.
Mass Layoffs At IBM
International Business Machines Corp., the biggest technology employer, may cut thousands of jobs this month amid the global economic slowdown, according to the employee group Alliance for IBM.
Employees have been hearing that layoffs will take place in late January, said Lee Conrad, national coordinator of the Alliance, an organization seeking union recognition at Armonk, New York-based IBM. The size of the reduction may be larger than those in the past few years, he said today in an interview.
“Generally they go in batches of a couple hundred here and a couple hundred there,” Conrad said.
A post on the Alliance’s Web site said the company may cut 16,000 jobs, which would top the 15,600 eliminated by Chief Executive Officer Sam Palmisano in 2002.
ConocoPhillips to Cut 4% of Staff
Bloomberg is reporting ConocoPhillips to Take $34 Billion Charges, Cut Staff.
ConocoPhillips, the third-largest U.S. oil company, said it will write down an estimated $34 billion of previous acquisitions including a stake in OAO Lukoil, and cut 4 percent of its workforce, after energy prices plunged.
Living Within Means
“We are positioning ourselves in the current business environment to live within our means in order to maintain financial strength,” Chief Executive Officer Jim Mulva said in the statement.
ConocoPhillips had about 33,800 workers at the end of 2008, said Becky Johnson, a company spokeswoman. Four percent of the company’s workforce is 1,352 employees. The company also expects to reduce its contractor headcount, Mulva said in the statement.
Calculated Risk was compiling a list earlier today in Layoffs: I read the news today, oh boy! Here are four not on the above list.
General Electric Co.’s finance arm may cut 7,500 to 11,000 jobs, or at least 10 percent of its workforce, because of the global financial slump, people familiar with the company’s plans said.
The reductions are part of GE Capital’s announced plan to reduce expenses by $2 billion this year, said the people, who didn’t want to be identified because the numbers aren’t public. The savings goal also includes expenses such as office closings.
Pfizer Inc. plans to lay off as many as 2,400 salespeople in the U.S., or as much as a third of its field force, according to a person familiar with the matter.
The cuts are likely to knock the drug industry’s leading employer of sales representatives from the top spot, said Jaideep Bajaj, managing director of ZS Associates, … REST BY SUBSCRIPTION
Advanced Micro Devices Inc. plans to cut 1,100 jobs, 9 percent of its global staff, and slash the remaining employees’ pay as the chip maker hopes its third round of layoffs in a year can help it get through a brutal market for computer sales.
The Sunnyvale, Calif.-based company said Friday that 900 workers will have their positions cut. The rest of the reductions are coming from attrition and the previously announced sale of a business unit.
Blue Cross Blue Shield of Michigan plans to cut up to 1,000 jobs and make other budget cuts this year in another blow to the state’s economy.
The company hinted at possible layoffs last year after the Michigan Legislature did not pass changes to insurance rules sought by the company. Blue Cross says it wants law changes because it is losing millions of dollars each year on health insurance policies that cover individuals.
87,235 + 16,000 + 1,352 + 11,000 + 2,400 + 1,100 + 1,000 = 120,087 mass layoff announced in half a month at large corporations.
As bad as that seems, bear in mind that small and medium sized businesses are actually leading the jobs contraction for the past few months.
Floodgates Open On Small Businesses
The small business weakness that started in July has now become a floodgate of job losses. Please consider the December 2008 ADP Small Business Report.
Nonfarm Private Employment Highlights
• Total employment: -693,000
• Small businesses: -281,000
• Medium businesses: -321,000
• Large businesses: -91,000
• Goods-producing sector: -220,000
• Service-providing sector: -473,000
• Manufacturing industry: -120,000
Small businesses represent payrolls with 1-49 employees
Medium businesses represent payrolls with 50-499 employees
Large businesses represent payrolls with more than 499 employees
Nonfarm private payrolls by selected industry sector and size
click on chart for sharper image
It is also important to add in all of the self employed real estate agents who have not made a sale for months on end, those selling trinkets on Ebay no longer finding buyers, anyone on commission now making low or zero commissions, and tens of thousands reduced to part time who want a full time job. Other than the part-timers, the other categories above are not reflected in the official job statistics at all.
Living Within Means
In the ConocoPhillips report note the key phrase “We are positioning ourselves in the current business environment to live within our means in order to maintain financial strength.”
Frugality is the new reality, and that applies to businesses and consumers alike. Those not living within their means will be in for a quite a shock if frugality is forced upon them via unemployment.
Social Mood, Not Fed Bureaucrats, Will Define The Future. That mood pendulum has barely begun to shift from consumption to savings. Pendulums do not stop at equilibrium, they always overshoot.
Mike “Mish” Shedlock
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