Human Capital & Careers

Tech Companies Lead Layoff Moves

Most notably, Microsoft breaks with tradition by announcing 5,000 job cuts.
Stephen TaubJanuary 23, 2009

On this week’s still-bustling layoff front, large technology companies dominated the news with vigorous head-count reductions. The most shocking was by Microsoft, which said it will cut 5,000 jobs — reportedly its first-ever massive layoff.

The world’s largest software company said the eliminated positions will be widely dispersed, affecting research and development, marketing, sales, finance, legal and corporate affairs, human resources, and IT. The cuts will be made during the next 18 months, with 1,400 coming immediately, according to a memo from Microsoft CEO Steve Ballmer to employees.

“We’ll also open new positions to support key investment areas during this same period of time,” added Ballmer. “Our net headcount in these functions will decline by 2,000 to 3,000 over the next 18 months. In addition, our workforce in support, consulting, operations, billing, manufacturing, and data center operations will continue to change in direct response to customer needs.”

Ballmer told employees that the fact Microsoft is growing at all during the worst recession in two generations reflects its strong business fundamentals. But he conceded that the company is not immune to the effects of the economic turmoil, noting that consumers and businesses have reined in spending, which is affecting PC shipments and IT expenditures. “Our response to this environment must combine a commitment to long-term investments in innovation with prompt action to reduce our costs,” he wrote.

Meanwhile, chip giant Intel Corp. said between 5,000 and 6,000 jobs will be affected when it closes or halts production at four plants. However, it stressed that not all employees will leave the company; rather, some may be offered positions at other facilities. The actions will take place between now and the end of 2009.

And Swedish wireless-equipment maker LM Ericsson said it would eliminate 5,000 jobs, including 1,000 in Sweden.

In industries other than technology, industrial parts and systems maker Eaton Corp. said it is cutting 5,200 jobs, which is expected to reduce costs by $125 million, according to the Associated Press. The layoffs are in addition to 3,400 job cuts last year, the wire service noted.

CC Media Holdings, parent of Clear Channel Communications and Clear Channel Outdoor Holdings, said it has eliminated 1,850 full-time positions, representing roughly 9 percent of its total workforce, as part of a restructuring program targeting a reduction of fixed costs by about $350 million on an annualized basis.

Chemicals maker Huntsman said it will cut 1,175 positions by year-end, or more than 9 percent of its employees. Full-time contractors working in the company’s divisions and functions will be reduced by an additional 490 positions. Together, these reductions will result in operating cost savings of $150 million, the company said.

Rohm and Haas said it will cut 900 positions, which will result in about $90 million in pretax restructuring and asset impairment charges in the fourth quarter of 2008. The provider of specialty materials said the action comes on top of the 925 job cuts announced last June.

Time Warner’s Warner Bros. Entertainment said it would cut about 800 jobs, or 10 percent of its worldwide staff, according to Reuters, citing an E-mail sent by studio heads to employees worldwide.

“We are very sad to announce that based on the global economic situation and current business forecasts, the Studio will have to make staff reductions in the coming weeks in order to control costs,” wrote Barry Meyer, chairman and chief executive, and Alan Horn, president of the studio, according to the wire service.

Harley-Davidson said it will eliminate 1,100 jobs in 2009 and 2010, including about 800 hourly production positions and about 300 nonproduction, primarily salaried positions. About 70 percent of the workforce reduction is expected to occur in 2009.

“We obviously need to make adjustments to address the current volume declines,” said Harley CEO Jim Ziemer. “But we are also determined to do that in a way that will make us more competitive for the long term. Our management group will engage with union leaders, through our partnering relationship, regarding these changes.”

Audio-equipment maker Bose Corp. is cutting 1,000 jobs, or about 10 percent of its workforce, according to the AP. Carolyn Cinotti, spokeswoman for the privately held company, said the layoffs would occur in “select areas, including manufacturing” and in its Massachusetts headquarters.

And Tandy Brands Accessories said it is reducing its overall salaried employee head count by about 17 percent as part of a larger cost-cutting program.