Economic woes lead to layoffs in some sectors, but this time layoff notices will spread everywhere. When the dot-com and housing bubbles had burst, it had been easy to see what kinds of jobs would disappear. But currently, as worried creditors cower and stop lending, virtually every sector is likely to be hit in the very next downturn slated to begin this fall. Almost all businesses rely on credit to operate, just as they need customers to have purchasing power.
With loans cut, businesses and consumers tightening their belts, jobs will be cut across a wide range of economic sectors, from high-tech to investment banking to manufacturing industries.
According to an October 20 report published by the United States Department of Labor, the 4-week moving average for the duration of unemployment represents the highest peak in seven years. The average number of new jobless claims rose to 483,250 for the week of October 11, the highest figure since 2001. The unemployment rate for September remained constant at 6.1%, but economists forecast a sharp deterioration In the coming months.
The underperformers are vulnerable
“This is a recession that respects the level playing field,” said Cathy Paige, vice president of ManPower, a temporary employment company that is experiencing softening demand from its clients. “Everyone feels it. »
In any industry, the workers most vulnerable to layoffs are “the worst performers,” says Nancy Albertini, president of the Albertini Group, a Dallas-based staffing firm. “Companies are going to say, ‘We wanted to eliminate those.’ “, she says. After ejecting low-performing staff, companies will lay off in functions that they do not consider essential such as marketing, communication and human resources. “After these categories, each position will be, depending on the sector of activity, a legitimate target,” says Albertini. What began in the financial sector with the failures of Bear Stearns and then Lehman Brothers is spreading to other sectors. Housing, of course, but also technology is no longer safe,
Silicon Valley has already made a flurry of announcements. Yahoo is expected to announce job cuts this week, possibly around the time of its quarterly earnings announcement. Yahoo already cut 1,000 jobs last January. Earlier this month, eBay announced the layoff of 10% of its 16,000 workers. Last month, Hewlett-Packard announced that it would lay off 24,600 workers over the next three years, but plans to hire 12,300 as part of its restructuring since its purchase of Electronic Data Systems in August. Meanwhile, Google has reduced the number of its service providers but continues to expand in other areas.
Online property takes a hit
Online property companies, which have seen strong growth as house prices fall, say they are also being forced to cut staff. Zillow, the real estate appraisal website, announced on October 17 that it would reduce its workforce by 25%, or 40 positions, justifying itself by the recession. “One of the reasons this is so difficult is that the business continues to grow,” Zillow CEO Rich Barton said in a note posted on the company’s website.
On October 13, Redfin, an online real estate brokerage firm, announced a 20% reduction in its workforce as its business took a hit this month. “October won’t be too bad but we’re headed for a deep abyss,” Redfin CEO Glenn Kelman wrote on the company’s blog.
While low-cost retailers like Wal-Mart Stores should manage to ride out the slump over the holiday season, specialty stores are unlikely to fare as well as consumers grapple with rising unemployment and falling home values. Long-weakened Circuit City is considering job cuts and closing 150 stores to conserve cash, The Wall Street Journal reported on Oct. 20.
Falling Food Consumption
A Circuit City spokesman declined to comment on what he called “the rumours.” Competing electronics retailer Best Buy, which typically hires extra staff during the holiday season, plans to cut seasonal hiring this year; which represents no less than 10,000 jobs. The entertainment sector is also cutting into its personnel; Playboy Enterprises announced on October 15 that it was going to close its DVD department, resulting in the loss of 80 jobs.
Consumers are even restricting themselves on essential purchases like groceries. On October 14, PepsiCo, the world’s largest snack maker, announced that it would cut 3,300 jobs after a drop in its third-quarter profits. The company also lowered its forecast for the rest of the year. It is closing six factories and reducing its workforce in duplicate positions and sales functions. Richard Goodman, the CEO, said on a conference call with analysts that PepsiCo shares have depreciated 25% since the start of the year.
Industries and manufacturing companies are also reducing their workforce. Smurfit-Stone Container, which manufactures paper and cardboard packaging products, announced on October 20 that it will close a pulp mill in Quebec by the end of the month, resulting in the loss of 218 jobs. Danaher, the maker of professional tools for craftsmen, is closing a dozen locations and laying off 1,000 workers. General Motors has announced that it is closing its locations in Michigan, Wisconsin and Delaware. It will cost over 4,000 jobs, and more if the company completes its deal to acquire Chrysler.
La santé est un rayon de lumière
Existe-t-il un rayon de lumière dans le sombre horizon du marché du travail? « S’il y a des obstacles, nous pouvons compter sur les soins de santé et l’énergie », explique John Challenger, PDG de Challenger Gray & Christmas, agence de placement basée à Chicago. « La demande ne va pas se volatiliser. » Mais il a ajouté que même les perspectives pour ces secteurs dépendront de l’efficacité des différents gouvernements dans leurs efforts pour soutenir l’économie. « En tout état de cause », dit Challenger, « cela va empirer avant de s’améliorer. »