Human Capital & Careers

Layoff Notices Burn Up Presses

From coast to coast and beyond, companies are issuing pink slips and warning of bad financial results to come in 2009.
Stephen TaubDecember 19, 2008

Editor’s Note: This article has been updated to reflect the fact that Baldor is reducing headcount through attrition, and not through layoffs.

The pace of layoff announcements showed no signs of slowing down in the past week. Once again, a wide array of companies announced job cuts and, in some cases, pay freezes for top executives.

When revealing their workforce plans, a number of companies took the opportunity to issue strong warnings about a major impending downturn in their business.

The largest round of pink slips was fired off by hard-drive maker Western Digital Corp., which said it plans to cut 2,500 jobs, or about 5 percent of its global workforce. It also said it would reduce the compensation of the company’s executive officers, board of directors, and senior management, and trim the manufacturing work hours by about 20 percent from reduced use of temporary workers, reduced overtime, and employee attrition.

“In the current macroeconomic climate, we expect demand weakness to last well into the middle of the 2009 calendar year,” said president and CEO John Coyne, who also announced the closure of a number of manufacturing facilities and a reduction in capital spending.

Newell Rubbermaid, which makes storage products and other household items, announced an 8 percent to 10 percent reduction of its salaried workforce that will continue into 2009, and a wage and salary freeze. The Associated Press said the cuts affect up to 1,000 jobs.

“We are seeing extraordinary volatility, weaker than expected demand, and customer inventory reductions across virtually all geographies and market segments, with trends worsening as we near the end of our fourth quarter,” said Mark Ketchum, president and CEO. “The unprecedented rapidity of the economy’s decline makes it difficult to anticipate an economic rebound any time soon.”

Aetna said it will cut 1,000 jobs, or nearly 3 percent of its 36,208 employees. The insurance giant said the action is designed to align administrative expenses with the company’s growth outlook for 2009 and redirect resources to areas with a greater potential for future growth.

Another insurer, Genworth Financial Inc., said it will eliminate about 1,000 jobs globally, or more than 13 percent of its total. The company expects to record a pretax nonoperating charge of about $45 million in the fourth quarter of 2008 for severance, outplacement, and other costs.

“We are making tough business decisions to become substantially more streamlined and support our cost and capital positioning during this unprecedented period,” said Michael Fraizer, Genworth chairman and CEO.

Elsewhere in the financial-services industry, Northern Trust Corp., which provides private banking, investment management, and global custody services, said it plans to cut about 450 jobs in 2009. And brokerage giant Charles Schwab Corp. said it will eliminate more than 100 jobs, resulting in a charge of $20 million.

Meanwhile, Baldor Electric Co. said it will cut 900 positions by June through attrition, which will save the company $30 million in 2009. The company stressed that it would reduce headcount through attrition, noting that it had not instituted layoffs, nor had it had layoffs in nearly 50 years. “It is our strategy not to have to if at all possible,” Tracy Long, vice president of investor relations.

Caterpillar Inc. said it notified 814 production employees at its Mossville, Illinois, engine-assembly facility that they would be laid off indefinitely. The company noted that in recent months, production volumes at the Mossville engine facility have decreased significantly because of poor demand.

Atmel, a maker of microcontrollers, said it is reducing its North American workforce by 11 percent. It also announced a 10-day shutdown for nonmanufacturing employees and a hiring freeze, except for critical positions. The company said it expects to realize about $18 million of savings on an annualized basis and incur one-time charges of $4 million related to severance in the 2008 fourth quarter.

Drugmaker Bristol-Myers Squibb said it will eliminate 10 percent of its workforce through 2010, according to the AP. It also said it will drop 800 positions by the end of 2008, including filled and vacant jobs worldwide. Last year the company cut about 4,200 jobs.

Smaller companies are also making sizable cuts. For example, TomoTherapy Inc., which makes a radiation therapy system, said it has reduced its workforce by about 12 percent through a combination of layoffs and the elimination of open positions.

Headhunter Heidrick & Struggles said it will reduce its workforce by 15 percent.

Teleflex Inc., which makes and distributes engineered products, said it will cut 150 employees.

Myers Industries Inc., which makes plastic products for industrial, agricultural, automotive, commercial, and retail uses, said it is closing three plants and eliminating about 200 jobs.

Video-game maker Electronic Arts Inc. will cut 1,000 jobs, or 10 percent of its workforce, and consolidate or close nine studios and publishing locations.

Another video-game company, Midway, plans to cut 25 percent of its workforce and suspend development of some titles so it can work toward repaying creditors.

Struggling biotechnology company EntreMed Inc. said it would cut about 60 percent of its jobs, and that CDO James Burns and CFO Dane Saglio will leave the company to reduce costs.

Overseas, Fiat Group SpA said it will shut down most of its Italian plants for a month, and lay off nearly 50,000 workers for an extended holiday due to a huge drop in demand for new cars. In addition, Swedish appliance maker Electrolux is laying off more than 3,000 workers worldwide, Canadian-based printer Quebecor Inc. said it will cut 600 jobs, and France’s Natixis is dropping 840 jobs.