U.S. corporate job cuts on track for a record year, despite record employment
NEW YORK (CNNfn) - Job cuts at U.S. companies surged 123 percent in November after falling to a 25-month low in October, putting 1999 on track for a record year of job reduction, a private report released Tuesday showed.
PriceWaterhouseCoopers, NEC (NIPNY), CKE Restaurants (CKR), KeyCorp (KEY) and Filene’s Basement were among the varied companies announcing job cut intentions last month, making their dubious way into international outplacement firm Challenger, Gray & Christmas’s monthly calculations. Filene's Basement, once part of Federated Department Stores Inc. (FD), filed for bankruptcy in August.
And toy maker Hasbro Inc. (HAS) may make December’s list after unveiling its intentions Tuesday to cut 2,200 positions -- about one-fifth of its global workforce -- to revamp its manufacturing.
"There is a good chance that we will shoot past the 1998 total and this will become the record job-cut year of the decade," said John A. Challenger, chief executive officer of the Chicago-based firm.
Paradox
Challenger noted the obvious paradox between record job-cutting and near-record employment, suggesting the losses in some industries such as semiconductor production and financial services are being absorbed into others such as e-commerce, transportation and pharmaceuticals.
"All this job-cutting is occurring at a time when nearly every part of the country is at full employment,” he said. "Companies have had to scale back growth plans because there is no one to hire."
The other factor is growing consolidation between companies and the need for swift, decisive cost cutting to ensure competitiveness. Oil powerhouses Exxon Corp. (XON) and Mobil Corp. (MOB) a week ago received government approval to go ahead with their $82 billion mega merger, and Warner-Lambert is working on its $71 billion merger with American Home Products (AHP).
"We are in a deregulated industry hyper-competitive environment, and that’s creating a lot of companies that don’t win,” Challenger said. "They lose market share and have to cut back.”
More than double
In all, U.S. companies announced 50,907 layoffs in November, a 123 percent increase over the previous month. From a year earlier, the numbers are more in line -- just 1 percent below the 50,642 announced in November 1998. Year to date, some 630,450 job cuts have been announced, about 7 percent behind the 677,795 announced in 1998.
For December, some of the job cuts will come from companies involved in mergers, Challenger predicts, though so far only one in nine job cuts this year have been a result of mergers or acquisitions. Last December, Challenger reported over 100,000 job cuts, well above the firm's own expectations.
"Some major employers who indicated plans for significant cuts earlier this year have yet to make the announcements," Challenger said.
Year-to-date, retailers and computer makers lead the industries with the biggest increase in job cuts from 1998, following closely by financial services, commodities, and aerospace and defense.
