Layoffs Continue to Mount
NEW YORK (TheStreet) -- Despite a fantastic jobs report from the government in January, layoffs this year are still piling up.
Companies continue to try to stay lean after drastic cost cutting measures during the recession. And, hiring is far from normal rates given companies' reluctance amid an uncertain global economic outlook.
Job growth in 2012 faces two big problems -- employers complain that they can't find the right people to fill vacancies and many job seekers are unable or unwilling to relocate to places where new jobs are created.
"Information technology, specialty manufacturing, nursing, and commercial construction are areas that are growing, but all of them require specialized skills," say consultants at Challenger, Gray & Christmas. "Even areas like long-haul trucking, which is in desperate need of drivers, requires a certain level of training that many job seekers are unwilling to pursue."
There are signs of improvement. Automatic Data Processing said Wednesday 216,000 private-sector jobs were added in February. Economists polled by Thomson Reuters forecast ADP to report that companies added 200,000 jobs during the month, after an addition of 170,000 in January.
Still, the layoffs continue to grow.
TheStreet is tracking job cuts over the year. Click through to see what companies have announced layoffs so far in 2012...
The company had 7,300 employees as of the end of 2011.
"Over the last several years, we've grown our organization tremendously and made large investments in our infrastructure in order to better serve our global community," said Mike Morhaime, head of the Blizzard unit. "However, as Blizzard and the industry have evolved we've also had to make some difficult decisions in order to address the changing needs of our company,"
The company, like other food and beverage makers, is facing higher material costs. Even its competitor, Coca-Cola, is undergoing cost cutting.
Pepsico's CEO, Indra Nooyi, said in a media briefing in early February that the layoffs would amount to 3% of its total workforce in more than 30 countries. The company is pouring $500 million to $600 million in ads and marketing this year along. It also plans to invest $100 million in store displays, coolers and racks, and will increase dividends and share buybacks.
The restructuring is expected to save the company $1.5 billion by 2014, adding to the $1.5 billion in saving costs already announced.
Hewlett-Packard is cutting webOS jobs, although it says that it will try to redeploy 275 employees to other roles within the company. WebOS is an operating system that HP says no longer needs many of the engineering positions that it required before. The plans were announced at the end of February.
The firm plans to make the platform's source code available under an open source license by September. The system was acquired in 2010 as part of HP's buyout of Palm for $1.2 billion. Since then, the firm has chosen to go the open source route instead of selling off the system to other vendors.
HP posted mixed results in the first quarter. The company is about to undergo a major transition to improve its supply chain and sales force productivity under new CEO Meg Whitman.
Some 4,000 workers are getting cut at Nokia
On Feb. 8, the company said it will cease production of handsets in Hungary, Mexico and Finland and ramp up production at factories in Beijing, Masan and South Korea. The company has announced more than 14,000 job cuts after pairing with Microsoft to compete against Apple in smartphone market share.
Some 2,300 workers will be laid off in Komaram, Hungary, 700 in Reynosa, Mexico and 1,000 in Salo, Finland, where Nokia runs its oldest factory.
China already makes up about a third of Nokia's output. The company is looking to expand operations in Asia, including by building a plant in Vietnam and in Dongguan, China. Apple assembles its smartphones in China.
According to the company, the new round of layoffs will save the company $1.6 billion each year. "One change already under way is the simplification of the company's global commercial organization structure. The number of sales and marketing regions has been reduced from five to three and smaller countries are being clustered, a move that will optimize resources, increase shared services and reduce the cost base," said AstraZeneca in a statement.
Already, the company has announced tens of thousands of layoffs after announcing its first major restructuring program in 2007.
American Airlines said it is laying off 13,000 union workers. Most of the cuts come from the airline's maintenance operations. Other eliminations include ground workers and flight attendants. Some 1,400 employees in management will loose their jobs, including 400 pilots.
"We will end this journey with many fewer people. But we will also preserve tens of thousands of jobs that would have been lost if we had not embarked on this path," said Thomas Horton, CEO of AMR
The timeline for the layoffs is still uncertain although the company needs to save more than $1.25 billion each year in labor costs. A portion of the savings may come from a shift in underfunded pension plans to Pension Benefit Guaranty Corp., although the government agency said it would block this move by American Airlines.
AMR Corp filed for bankruptcy on Nov. 29, 2011.
When the company first announced that it will be shutting its home mortgage-origination operation year in the year, it said it would cut a total of 4,300 workers in the unit.
The largest U.S. life insurer said in October that it is putting its mortgage unit up for sale, following plans to sell it deposit-gathering operations to reduce federal oversight. In December, the firm agreed to sell $6.5 billion worth of bank deposits to General Electric
MetLife's mortgage business could be hard to sell because of potential regulation complications. Another option the firm said it would pursue is winding down the business, which it estimates would cost as much as $110 million.
For now, the company plans to continuing servicing its current mortgage customers but will no longer accept new loan applications for forward mortgages.
The company that helps people find jobs is itself cutting back on workers.
Internet job board Monster Worldwide
Less than 100 of the cuts are in Massachusetts, where the company's headquarters are located. Monster said in a press release that it would increase sales and marketing going forward. In 2010, the company completed the acquisition of Yahoo! HotJobs, a $225 million deal that gives Monster exclusive ability to provide job content for Yahoo!'s U.S. and Canadian homepages.
UNITED PARCEL SERVICE
The world's largest shipping carrier is scaling back.
The cuts come as UPS will no longer manage inventory and fill orders for online retailer Zulily Inc, a Seattle-based company that sells clothing and accessories for women and children.
According to UBS, operations will continue at the facility, which will have a smaller workforce of about 150. Kentucky's is where the company has its largest air hub. UBS has invested $2 billion over recent years to expand its hub in Louisville.
Boston Scientific, which pays a 40% royalty on sales of Abbott's Xience stent, recently chose to use Promus Element, its own in-house stent, instead.
Some 300 workers at Abbott's stent business in Southern California will be let go. Less 200 workers will get cut from the diagnostic business in Lake Country, Illinois. The layoffs come as the company has been in ongoing restructuring efforts for years. In early 2010, Abbott cut 1,900 workers in its pharmaceutical division.
The medical device and drug maker reported that its profit increased 12% in the fourth quarter, helped by double digit sales growth of Humira, an anti-inflammatory drug. The braded drug business, which includes Humira, will be spun off so that investors can separately value Abbott's other businesses, according to the company in October. The company's business post-split will be more predictable in that it will be free of risks associated with developing innovative pharmaceutical drugs.
The cuts are part of a larger plan to overhaul the company. On Jan. 25, the retailer said it would take a new pricing approach, including running month-long promotions. "We want to let
Johnson had faced pressure from the company's largest shareholders to slim down the business. J.C. Penney plans to do away with its myriad of promotions and put in new changes Feb. 1.
Fourth quarter results from the chip maker were better than analysts expected as customers replenished depleted inventories. The company has said it would hire new workers for some factories in the first quarter. However, its overall outlook for the current quarter was lackluster given a drop in sales for its wireless business that it is closing.
In a Jan. 23 conference call, chief financial officer John Gerspach said, "we are not oblivious to the fact that our cost structure cannot be justified by our current revenue... we must either drive revenue growth and operating leverage, or we will have to restructure, cut capacity and cut expenses."
Job cuts going back to late last year now total 5,000 for the company, representing 1.9% of its total workforce as of the end of 2011. The main concern for the bank continues to be the overhang from events in Europe.
Based in Northfield, Illinois, Kraft is known for its food products, including biscuits, cheese, beverages and other packaged grocery goods. The company operates in 170 countries and owns a number of iconic brands like Cadbury, Maxwell House and Oreo.
The split in its businesses will result in two publicly traded companies. One will include snack brands such as Trident gum and Cadbury chocolates. The other will focus on groceries businesses like Maxwell House coffee and Ocsar Mayer meats.
More layoffs may come as the company said that its latest workforce reduction plans do not include changes in its manufacturing facilities.
The company terminated trials of Tekturna after the pill caused complications for diabetes patients. Analysts say that growth will likely struggle in light of the charges the company is taking on Tekturna and generic competition for Diovan.
Basel, Switzerland-based Novartis has been cutting expenses since Joe Jimenez became chief executive officer in February 2010. The latest layoffs are the third time Novartis has announced job cuts in the past 14 months. The company announced 1,400 layoffs in November 2010 and 200 more in October 2011.
Of the 1,960 job cuts planned for the current year, 1,630 will be from the company's sales division. The reductions will save the company an estimated $450 million by 2013.
The U.K. banking sector still looks grim this year.
The move by the bank comes after rival firm Royal Bank of Scotland
Britain's largest government-owned bank will slash 4,800 jobs over the next three years as it tries to get rid of unprofitable business units. The Royal Bank of Scotland
The Edinburgh, Scotland-based bank said it will look to sell its loss making equities, corporate brokerage, equity capital markets and mergers divisions. In mid-January, the company said that it was in talks with "a number of potential buyers" for these operations.
"We are pulling out of business areas that are unprofitable and where we have weaker customer positions than the market leading group of competitors," said Chief Executive Officer Stephen Hester in a staff memorandum obtained by Bloomberg. "We are also scaling back resources in areas where market developments threaten our ability to fund ourselves sustainably and profitably."
Some 3,500 of the total job cuts announced will come from RBS's investment bank. The reductions follow 2,000 layoffs at the bank from the second half of 2011.
RBS's plans are yet another example of restructurings and layoffs underway at most major investment banks around the world. According to Bloomberg estimates, the global financial services industry saw 200,000 total cuts in 2011. Analysts say that some areas such as commercial banking have bottomed out in terms of cutting jobs. However, investment banking layoffs continue to dominate headlines as new regulations kick in. Chances that Wall Street will be a part of growing U.S. jobs recovery look bleak.
The Defense Department estimates that the Marine Corp will lose 27,000 troops, suggesting that the public sector may yet cut into payroll figures going forward.
The shrinkage from 202,000 to as few as 175,000 troops is part of an estimated $1 trillion in Defense Department budget cuts over the next decade. The Marine Corp has already begun to offer early retire plans in preparation for these cuts.
The announcement was met with negative reaction with critics saying that the U.S. should take caution in its military adjustments as the threat of terrorism still looms and as China and North Korea seek to expand their military powers.
"We really need to ask ourselves whether this is the right time for such a significant change in U.S. defense strategy," said Rep. Duncan Hunter, R-El Cajon, a member of the House Armed Services Committee. "For me, the answer is a resounding 'no.'"
The Philadelphia School District is laying off 1,400 works in 2012. The district issued layoff notices to blue-collar workers who clean Philadelphia's classrooms and attend to buses, according to the Philadelphia Inquirer. The cuts are effective by year's end.
The move comes after the Philadelphia School District cut back 850 workers in September and more than 1000 teachers in the summer of 2011. Officials said they had to let some members in the school district's blue-collar union go after failing to extract concessions worth $16 million.
"As a result of this rejected agreement, there remains a budget gap that the district must close this year, and the district now anticipates it will face significant budget challenges in the coming years," said district spokesman Fernando Gallard in a statement. "The district is now forced to take other steps to achieve needed savings and to keep all of its options open regarding staffing in future years."
The current plans include cutting back 276 building engineers, 126 custodial assistants, 503 general cleaners, and 501 bus attendants. However, the final number of workers let go depends on how the dispute over the contract concessions is resolved.
-- Written by Chao Deng in New York.
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