Strategy

More Firms Put Workers in the Crosshairs

Layoff plans announced range from Goodyear to Walt Disney to Avon as U.S. jobless numbers skyrocket.
Roy HarrisFebruary 20, 2009

As federal unemployment figures continued to surge — with 627,000 new jobless claims reported, and the number of Americans receiving unemployment checks jumping to a record 4.99 million — new corporate layoff announcements this week confirm that the pain will only worsen.

Goodyear Tire & Rubber Co. Wednesday announced plans to cut nearly 5,000 more jobs, or almost 7 percent of the tire maker’s work force, after posting a fourth-quarter loss on sharply lower revenue. It had eliminated about 4,000 jobs in the second half of last year, the Associated Press reported. Meanwhile, General Motors Corp.’s and Chrysler Corp.’s added requests for federal aid — to a combined level of $39 billion — came with more job reductions. GM now says it will have cut 47,000 jobs globally by the end of the year, 19 percent of its work force, while Chrysler aims to eliminate 3,000 more jobs.

In other industries under pressure, James Wainscott, chief executive officer of AK Steel Holding Corp. and chairman of the American Iron and Steel Institute, said Thursday that U.S. steel makers are now operating at about 50 percent of capacity, according to the AP. As for AK Steel, which already has laid off about 1,000 of its 6,500 employees at nine plants, the executive said after making a speech at Xavier University that the company will “probably double that before things get better.”

Entertainment giant Walt Disney Co. reported that an overhaul of its domestic resort business — including a combination of back offices at its Florida Walt Disney World and California Disneyland — would lead to an undisclosed number of job losses. The Orlando Sentinel account of the announcement said that Disney’s U.S. resorts now employ about 80,000, including 62,000 in Central Florida.

And cosmetics direct-seller Avon Products said Thursday that it had revised a reorganization plan in a way that would improve profit by cutting 2,500 to 3,000 jobs over four years, according to Reuters.

In Arizona — one of many states to have announced job cuts as part of budget-balancing — the Service Employees International Union said Thursday that it would sue in Maricopa County Superior Court in Phoenix to stop the reductions. It will allege that the state failed to follow its rules on reductions-in-force, and that it violated workers’ constitutional rights to due process, according to the AP.

Globally, the layoff picture remains equally grim. In an announcement reported today in London, mining company Anglo American PLC said that it will cut 19,000 jobs this year, and will suspend dividend payments, after reporting a 29 percent drop in 2008 profits. The company said it expected that the reduction in employees — 10 percent of its managed work force — would come through layoffs, attrition, and scaling back contractor arrangements.

Also during the past week, the Federal Reserve revealed that it had upped its projection for the U.S. unemployment rate to between 8.5 and 8.8 percent by the end of 2009. As recently as three months ago the Fed had been projecting a year-end rate of 7.1 to 7.6 percent.