People who get to the end of 2008 and are still at work can be thankful. The unemployment rate will probably be over 7%. That does not count the people no longer looking for work. Add them in and the figure is probably over 12%.
The business headlines have been filled with reports of layoffs nearly every day in the last half of the year. A lot of these have come at big, profitable companies, which says something about what they expect in 2009. Obviously, many of the largest cuts came at firms such as Citigroup, which are struggling to stay afloat, or firms such as Bear Stearns which simply disappeared.
Here is the 24/7 Wall St. 2008 report on the twenty largest layoffs by company. If a firm cut more than once during the year, those numbers have been combined for an annual total. We extend special thanks to Challenger, Gray & Christmas for its help.
1. Citigroup announced layoffs of just over 73,000. The big bank announced last month that it would let over 50,000 people go on top of 23,000 already fired or that were in the process of leaving. New CEO Vikram Pandit has done an especially poor job of getting Citi back on track. The firm’s stock has fallen from a 52-week high of $31.14 to $7.83. Several stock analysts have cut their fourth quarter earnings estimates. The government’s bailout of the bank, put together last month, may not be enough. Citi may have to raise more capital and fire more people.
2. The Bank of America (BAC) buyout of Merrill Lynch will cost 35,000 people their jobs. There are overlaps at the companies particularly the research and investment banking divisions. A total of 11% of the combined workforce will be shown the door. The layoffs at the newly merged company may not be over. Bank of America is considered undercapitalized. It took on a lot of home mortgages when it bought Countrywide. The net effect of that is that its stock is off as much as Citi’s over the last three months. The BAC roll-up of Merrill and Countrywide probably won’t work without a lot more costs cut.
3. General Motors (GM) has said that its cuts for this year add up to almost 34,000 people. That number is modest compared with the number of jobs the company took out in 2006 and 2007. If the firm goes into Chapter 11 cuts for 2009 may go up again.
4. Hewlett-Packard (HPQ) is one of the most successful tech companies in the world, perhaps because it is ruthless as keeping costs down. It bought IT consulting firm EDS earlier this year and slashed 25,000 people while mashing the two operations together.
5. Lehman Brothers simply does not exist anymore. In September, the company filed for Chapter 11. Some of the people in divisions bought by other companies or kept open waiting for buyers may be OK, but more than 23,000 poor souls were shoved out of work.
6. AT&T (T) is another company which is doing remarkably well, but does not want to face a hard economy with excess staff. The one part of the firm which has done very badly is its traditional landline business. The number of people and businesses who keep a traditional phone is dropping. Too many customers are moving to cell service of VoIP. The phone company chopped 12,000 people earlier this month. Added to other, smaller cuts and the total for the year is more than 17,000.
7. DHL Express cut almost 15,000 people. The ground and air shipping industry is being torn up by people who save money by using the post office or electronic delivery. DHL rivals Fedex (FDX) and UPS (UPS) are also having a hard time. DHL’s parent, Deutsche Post World Net, closed its land and air shipping operation in the US in early November.
8. The California Department of Education shows that the public sector is not being sparred. California has gone to the federal government for aid because of a massive budget deficit. The state is paying some vendors with IOUs and is threatening to cut some services completely. In the midst of all that 14,000 teachers will be out of work. If over-muscled governor Arnold Schwarzenegger cannot get California’s books balanced, the state will be letting a lot more people go.
9. Starbacks (SBUX) founder Howard Schultz came back to the company as CEO when he saw that the people he had put in place to run the company were screwing it up. His return did not make that any better. No one at the firm wanted to believe that customers would not pay $4 for a fancy cup of coffee in a recession, especially when McDonald’s was selling the same product for $2. To keep Starbucks in the black it closed over 600 stores and fired more than 12,000 people. The premium coffee business is not getting any better. The job cuts at Starbucks are not over.
10. Chrysler let over 12,000 people of this year on top of all those who left in 2007. Since the car company is on the brink of Chapter 11, the number of workers who leave the company may still move way up.
11. Citigroup tried to buy Wachovia, but Wells Fargo (WFC) snuck in a side door and got the prize. This was one of a number of large bank and brokerage house mergers. It probably would not have mattered who bought Wachovia. To save money and cut redundant services, the firm cut more than 11,000 jobs
12. Dow Chemical (DOW) is another profitable operation where earnings are being squeezed by the economic downturn. To combat falling margins, the firm is closing 20 plants and laying off 5,000 workers and 6,000 contractors. All those people being let go will be happy to hear the company is keeping its dividend.
13. NASA has said it will need fewer people when the space shuttle goes into retirement. The agency that put a man on the moon is cutting nearly 11,000 jobs.
14. The State of California makes the list twice as it chops seasonal jobs to preserve more cash. That means fewer lifeguards and guards at the state capital. It may also take longer to get a driver’s license. The cuts total more than 10,000 people
.15. Sun Microsystems (JAVA) is one of the worst run tech companies in the world. To stay ahead of its revenue trouble it likes to make big jobs cuts every year. In 2008, the total is 9,500. Instead of one big layoff, Sun decided to make one announcement early in the year and one last month. Sun will take a charge of about $600 million. No wonder the stock trades at just over $4. A little over a year ago, shares changed hands at $24. What is surprising is that CEO Jonathan Schwartz is still on board.
16. Bennigan’s filed for Chapter 7 in July. People just can’t afford to eat out the way that they used to. The restaurant company’s 150 company-owned stores shut down. Over 9,000 people lost jobs.
17. JP Morgan Chase (JPM) bought the banking operations of Washington Mutual, a bank which had become bloated with home mortgage loans made when real estate prices were flying up. JPM raised $10 billion to cover the costs of the transaction. It will get part of that money back by cutting over 9,000 people.
18. Bear Stearns simply disappeared in March after being in business for 85 years. JPMorgan bought the place for $2 a share. Because of rumors about Bear’s mortgage holdings customers started to pull their money out. The investment house was gone before it had a chance to say goodbye to its staff. JPM did not need all those bankers and brokers. More than 9,000 people were forced out of work.
19. American Airlines (AMR) was a victim of high fuel costs. Faced with rumors it could not finance its operations with oil well above $100, it had to cut the number of routes it was flying, the number of planes it operated, and more than 8,500 jobs
20. Merck (MRK) was just one of the Big Pharma firms that made big cuts this year. Bristol-Myers (BMY) recently said it would have to go through another round of cuts as patents run out on drugs and price pressure from generics rise. The harsh environment and a forecast of a bad 2009 caused the firm to chop more than 8,000 people.
It is hard to believe that just 20 companies have cut over 400,000 people in less than a year, but it is only the tip of the iceberg.
Douglas A. McIntyre