Leaping Layoffs, and Not Just on Wall St.

From H-P and tech to autos to newspapers, the jobs evaporate.
Stephen TaubSeptember 17, 2008

The financial services industry may be imploding and combining, with untold layoffs yet to come. But a number of companies seemingly far-removed from banking already have announced sizable layoffs this week.

The mounting number of unemployed hardly bodes well for the overall economy, which recently saw the nation’s unemployment rate climb to 6.1 percent.

Several companies announcing major job cuts operate in non-financial industries with their own troubles.

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The work week started with a serious jolt, as computer and printer maker Hewlett-Packard said that it will eliminate 24,600 jobs, 7.5 percent of its work force, as its way of digesting the $13.9-billion August acquisition of Electronic Data Systems.

H-P’s job reductions may well portend a trend for consolidating companies, as a sinking economy and falling stock prices point the way to more mergers — and a greater emphasis on eliminating so-called redundant costs as a result.

Elsewhere in IT, Lattice Semiconductor Corp. announced that it would cut its work force by 125 employees. Not much compared to H-P’s 24,600, perhaps, but huge for a company of Lattice’s size, accounting for 14 percent of its total headcount.

In the auto-parts realm — all too close to the struggling U.S. automobile business — Federal-Mogul Corp. said it would reduce its global work force by about 4,000 positions, or eight percent. “We are taking actions in response to a downturn in regional markets and global industry outlook,” said Chief Executive Officer Jose Maria Alapont.

Meanwhile, in newspaper publishing, McClatchy Co. said it would cut employment by about 10 percent, claiming about 1,150 full-time positions. The struggling media company cited the “difficult advertising downturn,” but added that roughly half the staff reductions are coming through voluntary programs and managed attrition.

McClatchy expects to achieve savings of $100 million over the next four quarters, excluding severance costs of about $20 million, from the reductions and other initiatives. “It is painful to announce these staff reductions, but the continued restructuring of our company is necessary given the relentless economic downturn and its impact on our business,” said Gary Pruitt, McClatchy’s chairman and CEO.

Last Friday, Alaska Airlines announced that it is reducing its work force by 9 to 10 percent as it slices passenger capacity by 8 percent, compared to a year ago. The cuts work out to 850 to 1,000 “operational” positions, including pilots, flight attendants, aircraft technicians, and reservations, customer service, and ramp agents.

“The one-two punch of record oil prices and a softening economy, on top of increased competition, has burdened Alaska Air Group with a $50 million loss on an adjusted basis for the first half of this year,” said Bill Ayer, chairman and CEO of Alaska Air Group, the parent company of Alaska Airlines and Horizon Air. “That demands decisive action to ensure the viability of our company.”

Not all of the jobs news is bad — depending on how you slice it. Barclays, in announcing that it would buy the investment banking and trading operations of Lehman Brothers, said that it would likely save up to 10,000 Lehman jobs among those that figure to be lost in the bankruptcy of the rest of the investment-banking giant.