Layoffs Take a (Brief) Holiday

Likely it's a year-end anomaly, as signs of economic problems are hardly abating. But the job losses continue at AMD, Interface Inc., Kemet, Textro...
Stephen TaubDecember 31, 2008

The rapid pace of layoffs slowed a bit as Corporate America — with its record November for job cuts just past — plans to ring out 2008. Could it be the sign of a bottom? Or, perhaps more likely, that few companies have the heart to fire workers during the holidays and preparations for New Year’s celebrations?

Whatever the reason, the government reported Wednesday that new claims for jobless benefits fell 94,000 last week.

Yet, while reports of corporate layoffs also were declining, for a number of work forces the job losses continued, as did the announcement of other major cost-cutting measures.

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Chip maker Advanced Micro Devices Inc. on Monday said it laid off 600 employees in the fourth quarter, 100 more than it had previously announced, Reuters points out. The company said in a regulatory filing that it will record a $70 million restructuring expense in the period, including $34 million related to severance and costs related to the continuation of certain employee benefits.

Interface Inc. said in a filing that it is ceasing manufacturing operations at its facility in Belleville, Canada, and reducing its worldwide employee base by about 530 employees in the areas of manufacturing, sales and administration. The carpet maker said it will take a pretax restructuring charge in the fourth quarter of $11 million. Its expected restructuring charge is comprised of employee severance expense of $8 million and impairment of assets of about $2.5 million.

Last week, Kemet Corp. said it was eliminating 1,500 manufacturing jobs, or about 14 percent of its total workforce. The maker of passive electronic components said the job reductions would begin immediately and be completed by mid-January 2009. The total cost savings from the actions will be about $4 million per quarter or $16 million annually. In addition, the company extended its normal holiday plant shut-down schedules at many of its manufacturing facilities between Dec. 23 and Jan. 5.

The company also announced that it will impose a 10-percent reduction in pay for all salaried employees, effective Jan. 1, excluding those on a commission based salary. In the U.S., the company also will temporarily suspend its 401(k) matching percentage, reducing it from six to zero. Permanent reductions will also be made in several retiree benefit programs, it added. The company assured that salary reductions for affected employees will be restored when the financial performance of the company “returns to acceptable levels.”

“It is imperative that in this time of worldwide economic slowdown we match our costs to the reality of our current market environment,” said Per Loof, Kemet’’s Chief Executive Officer.

Another manufacturer, Textron, meanwhile, said it has cut 2,200 jobs in the last couple of months, or 5 percent of its global work force.

And IT services giant Unisys Corp. said it will eliminate 1,300 jobs. It also suspended matching contributions to its U.S. 401(k) plan, which had been costing about $50 million annually, the company added.

Meanwhile, Caterpillar said that it is offering buyouts to management and support employees based in the U.S. In addition, it said that in 2009 executive compensation will be cut by up to 50 percent, compensation for senior managers will be reduced 5 to 35 percent, and other management and support staff will see a reduction of zero to 15 percent. Those changes reflect planned reductions in the company’s incentive compensation program and equity-based compensation.

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