Human Capital & Careers

Steady Drumbeat of Layoffs Grows Louder

General Motors, Goldman Sachs, and Chrysler, and Xerox are looking at headcount reductions.
Stephen TaubOctober 23, 2008

Another day, another spate of layoffs announced.

The growth in job-cut announcements is becoming reminiscent of late 2001 and early 2002, when the global economies crumbled following the Sept. 11, 2001 terrorist attacks and suffered the first of what could become two recessions in less than eight years.

On Wednesday, for example, Xerox announced that it plans to cut 3,000 jobs, or 5 percent of its total work force, because of a slowdown of orders from major corporations, according to the Associated Press. As a result, the company said, it will take a pre-tax restructuring charge of about $400 million in the fourth quarter.

Further, Chrysler LLC announced that on December 31 it will make a total of 1,825 job cuts related to the elimination of a production shift at a Toledo, Ohio assembly plant and the accelerated closure of a Newark, Delaware assembly plant. “The markets are facing unprecedented turmoil and we are in a time of historic change in the auto industry,” said Frank Ewasyshyn, executive vice president of manufacturing for the auto maker. “These tough, but necessary steps are vital to our long-term viability.”

Meanwhile, General Motors plans to cuts its salaried and contract workforce, according to Reuters. The cuts would start in late 2008 and early 2009, according to the report.

The wire service also reported that GM is suspending matching payments to employee 401(K) plans as of November 1. It also plans to suspend its tuition-assistance and adoption-assistance programs for its salaried employees by the end of the year.

The Wall Street Journal is also reporting that Goldman Sachs Group Inc., which recently decided to register as a bank, plans to cut about 10 percent of its 32,500 employees. The cuts are expected to be made throughout the company.

Also on Thursday, Janus Capital Group announced that it would reduce its workforce by about 9 percent, yielding an expected $15 million in annualized savings. The staff reduction is part of a firm-wide effort to cut costs, including general and administrative expenses, by $25 million to $30 million.

Late last night, Terex and AllianceBernstein also announced job cuts.

On Thursday the Labor Department reported that new claims for jobless benefits increased by more than expected last week. “Given the financial damage to date, I cannot see how we can avoid a significant rise in layoffs and unemployment,” former Federal Reserve chairman Alan Greenspan told a House committee Thursday.

Further, a new Watson Wyatt survey found that 26 percent of 248 companies are planning layoffs in the next 12 months, with 9 percent already having instituted them. Conducted in mid-October, the study found that another quarter are expecting to institute hiring freezes.

The survey also found that nearly one quarter (23 percent) of companies are planning on raising employee contributions to health care plans.