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Layoffs mount, and U.S. jobless claims outpace predictions in another stark week for employees.
Stephen Taub, CFO.com | US
November 13, 2008
This article was updated to include late-breaking announcements by U.S. Steel and Citigroup.
The financial crisis continues to land hard on the nation's work force. Jobless claims last week surged by 32,000, to a seasonally adjusted 516,000, and layoff announcements continued to thin out payrolls across the U.S.
The latest jobless-claim report from the Labor Department nearly matched the 517,000 claims reported seven years ago, and was the second-highest total since 1992, according to the Associated Press. Economists surveyed by Thomson Reuters had expected last week's claims to increase only slightly, to 484,000.
Among the list of layoffs by announced just this week by companies, across a range of industries, were several by technology companies. Applied Materials, a maker of computer chip-equipment, said it will slash 1,800 jobs, or 12 percent of its workforce, while National Semiconductor announced the cutting of 330 jobs, primarily in non-manufacturing functions, as part of a reduction in operating expenses. National Semi, which employs about 7,000 people worldwide, said it hopes to save $11 million to $13 million per quarter in operating expenses.
Meanwhile, the University of Texas Medical Branch in Galveston, a teaching hospital severely damaged by Hurricane Ike, will lay off about 3,800 workers, the AP reported, amounting to nearly one-third of its work force. The Board of Regents of the University of Texas System said the cuts would deplete financial resources and reserves so much in about three months that the school would be left "in the untenable position of having no funds to continue to operate."
Elsewhere, Cessna Aircraft Co. said it will cut 665 jobs in Kansas and Oregon, and television shopping channel QVC will eliminate about 900 positions over the next 14 months. QVC plans to create about 200 new positions, though, resulting in a net reduction of about 700, or 5.8 percent of its U.S. workforce, and increasing other cost-cutting initiatives to reduce forecasted operation costs by $30 million to $40 million for 2009.
Yum Brands Inc., known for its Pizza Hut, KFC and Taco Bell fast-food restaurants, aims to cut several hundred non-restaurant jobs, the AP reported. AK Steel is temporarily idling two plants, resulting in 600 to 650 layoff, according to the Pittsburgh Daily Times, which cited a United Steelworkers of America local official. And ADT Security Services is laying off 380 workers in one of its call centers.
Pittsburgh-based U.S. Steel announced it would layoff 677 hourly workers in the United States and Canada because of lessening demand for steel products, reported the Chicago Sun-Times.
At American International Group Inc., 178 branches are closing at its money-losing consumer finance unit, resulting in elimination of about 380 jobs.
And other companies announced plans to eliminate 100 or fewer jobs. They include Electrolux, which is letting 99 workers go at a washer and dryer plant in Webster City, Iowa, according to the Des Moines Register.
Overseas, job cutbacks are also in the works, with Nortel canning 1,300 employees and Nokia Siemens Networks eliminating about 1,820 jobs, according to Reuters. And BT Group PLC, Britain's largest phone company, on Thursday said it would cut 6,000 more jobs by March.
In the Bahamas, the famed Atlantis, in Paradise Island, laid off roughly 800 employees, or about 10 percent of the work force, according to the AP. And casino operator Las Vegas Sands Corp. is axing as many as 11,000 workers, including about 2,000 construction workers from Macau, and the remainder from Hong Kong, mainland China, and other countries.
On Friday morning, The Wall Street Journal reported that Citigroup is planning to cut at least 10,000 employees from its investment banking and other divisions. The cuts will be made on a global baasis. In its quarterly earnings report, Citigroup noted that it has reduced headcount by about 23,000 during the first nine months of 2008, with 11,000 of those cuts coming in the second quarter. Vikram Pandit, Citigroup's CEO noted that despite a drop in the value of legacy assets by $48 billion since the second quarter, "we are making excellent progress on the parts of our business we control, inclduing expense reduction, headcount, and balance sheet and capital management."
One employer apparently not announcing cutbacks is the U.S. Postal Service. Reacting to news reports that it plans to lay off 40,000 people, Gerald J. McKiernan, manager of media relations, fired off a press release asserting that the report is untrue. "Originating out of Shreveport, La., the story does quote a Postal Service spokesperson," his statement said. "Unfortunately, that spokesperson was in error. The Postal Service is not laying off employees. Efforts to match our workforce to a reduced workload are focused on voluntary early retirements. Voluntary early retirement has been offered to a number of employees and to date, 3,685 employees have accepted the offer."