68,000 Jobs Axed in One Day

[General Zod]

Can we start panicking yet?

NEW YORK (CNNMoney.com) -- The final week of January began with a bloodbath for the job market, as over 68,000 more cuts were announced on Monday alone.

At least six companies from manufacturing and service industries announced cost-cutting initiatives that included slashing thousands of jobs.

More than 200,000 job cuts have been announced so far this year, according to company reports. Nearly 2.6 million jobs were lost over 2008, the highest yearly job-loss total since 1945.

"It's all about the consumer, and the consumer's been hit hard," said Robert Brusca, chief economist at Fact and Opinion Economics. "It's a vicious circle as weakness begets layoffs, which beget more spending weakness."

Construction machinery manufacturer Caterpillar (CAT, Fortune 500) said Monday it will cut 20,000 jobs amid a "very challenging global business environment." The company had already planned to cut 15,000 workers since the fourth quarter of 2008, but added another 5,000, bringing the total to 20,000.

Pfizer (PFE, Fortune 500) said in an earnings report it would cut 10% of its staff of 81,900 and close five of its manufacturing plants. And a second round of cuts will shed about 15% of employees from the combined Pfizer/Wyeth staff of 120,000. That makes a total of 26,000 jobs lost. The company already cut 4,700 jobs in 2008.

Sprint Nextel Corp. (S, Fortune 500) will cut a total of about 8,000 jobs by March 31, the company said in a release. The telecommunications company's plan is to reduce internal and external labor costs by about $1.2 billion on an annual basis.

Home Depot (HD, Fortune 500), the world's largest home improvement retailer, announced Monday it will eliminate its EXPO design center business and cut 7,000 associates, or approximately 2% of the company's total workforce. The company blamed a lack of demand for big ticket design and decor projects.

Dutch financial group ING (ING) said Monday it will take a 2008 loss of $1.3 billion and cut 7,000 jobs. The company could not comment on where the cuts would take place. ING employs around 130,000 people across 50 countries.

Deere& Co. (DE, Fortune 500) , the world's top farm-equipment maker, said it would cut nearly 700 jobs between factories in Brazil and Iowa.

The job cuts across sectors didn't surprise Brusca, as nearly all are weak, he said.

"The services sector is shedding jobs at a horrific pace, because that's where most of the jobs are," Brusca said. "When the consumer is in tough shape it's hard for business to do well, because it all depends on consumption or investments."
Continuing the scary trend

The cuts mark a horrific start to the week, and a brutal start to 2009. In the previous week, around 40,000 cuts were announced across multiple industries.

Wednesday, in particular, was littered with a slew of job cuts: BHP Billiton, Clear Channel Communications, Intel, Rohm and Haas Co., UAL Corp. and Williams-Sonoma all announced job cuts totaling over 27,000 positions.

Schlumberger said Friday that it will cut 5,000 jobs worldwide, with 1,000 of the cuts taking place in North America.

Also last week, Time Warner Inc.'s Warner Bros. Entertainment said it would cut about 800 jobs, or 10% of its worldwide staff in the upcoming weeks, while Microsoft unveiled its plan to cut up to 5,000 jobs - 5.5% of its global workforce.
Outlook: A recovery in sight?

Brusca said he agreed with many economists' predictions that the recession will end after the second quarter of 2009. Americans might feel the job market start to bounce back a bit sooner than expected, he said.

"These recessions are like geometry," Brusca said. "It looks like we'll have a V-shaped cycle, in that we're going into this with very sharp losses. This intense-phase recession will probably recover fairly quickly, with the job market coming out it at the same angle it came in."

In the short term, the economy and the job market are in trouble, Brusca said. But "it doesn't look like the bottom is falling out of the economy," he said.

And there's a silver lining to the gloomy clouds over America's economy.

"The good news is it's so bad right now that we will have a definite, noticeable recovery when it comes," Brusca said. "We're getting a lot of adjustment out of the way early." To top of page

It's nice and all how they're trying to say the bottom isn't falling out, but 68,000 jobs in one day is an awful big chunk. . .

[Kanastrous]

It's hard to panic over something that's been so obviously coming for so long.

[aerius]

Brusca said he agreed with many economists' predictions that the recession will end after the second quarter of 2009. Americans might feel the job market start to bounce back a bit sooner than expected, he said.

"These recessions are like geometry," Brusca said. "It looks like we'll have a V-shaped cycle, in that we're going into this with very sharp losses. This intense-phase recession will probably recover fairly quickly, with the job market coming out it at the same angle it came in."

In the short term, the economy and the job market are in trouble, Brusca said. But "it doesn't look like the bottom is falling out of the economy," he said.

And there's a silver lining to the gloomy clouds over America's economy.

"The good news is it's so bad right now that we will have a definite, noticeable recovery when it comes," Brusca said. "We're getting a lot of adjustment out of the way early."

Bwahahahahahhahahaha!!
That's exactly what they said a year ago. The bottom is in, 2nd half recovery, it's all psychological. Pull the other one.
By the 2nd half of this year we'll be looking at over a million job losses every single month.

[Big Phil]

It's not 68,000 jobs a day, every day (i.e., we're not estimated to lose 1.4 million jobs in January). The report I've seen estimates 125,000 announced cuts (ie., big companies) and an undetermined number of losses at smaller firms. In other words, it sucks, but it's not catastrophic... yet

As an aside, as one of the Microsoft vendors getting hit hard by their layoffs and cuts in vendor spending, I think they were a long time in coming. In general, they laid off the most expensive, least productive employees, as well as the least profitable business units. While the timing may be shitty, and it scared a lot of people (myself included, if I can't make a living doing Microsoft's work for their lazy employees), it's GOOD for Microsoft to have gotten rid of a lot of the people they laid off. Frankly, they would be much better off if they'd cut 15%-25% of their staff, particularly the multiple layers of marketing folks they have. They have INTERNAL marketing staff, whose entire job is convincing other Microsoft employees (particularly sales people) how great their products are. Talk about a poor use of money...

[aerius]

They have INTERNAL marketing staff, whose entire job is convincing other Microsoft employees (particularly sales people) how great their products are. Talk about a poor use of money...

Damn, and I thought government work and the auto industry were the only places where they have an internal propaganda division.

[Big Orange]

^And people (Daily Mail readers especially) rage on against the bloated public sector.

And meanwhile on the other side of the pond:

Steel firm Corus cuts 3,500 jobs
Steelmaker Corus has confirmed that it is cutting 3,500 jobs worldwide, including about 2,500 in the UK.
The announcement comes after Corus, like all steel firms, has seen a substantial fall in demand.

Corus, a subsidiary of India's Tata Steel, currently employs 24,000 people in the UK and 42,000 worldwide.

It said it would be "mothballing" a facility at Llanwern near Newport, South Wales, and was trying to sell a majority stake in its Teesside site.

Corus said that 600 jobs would go at Llanwern, as part of a total 1,100 cuts across the firm's Welsh operations.

A further 1,400 jobs will go at other UK sites, including 713 in Rotherham, 108 at Wednesbury in the West Midlands, 93 in Scunthorpe, and 61 at Wolverhampton.

The other affected Welsh plants include Shotton, Ammanford, and Pontardulais.

And 80 jobs are to go in Scotland out of 500. Corus operates two service centres in Bellshill and Midlothian and the Dalzell plate mill in Motherwell.

'Carefully considered'

Corus said it would "make every effort to achieve the job losses through voluntary redundancies".

"The structural changes we are proposing today have been carefully considered," said Corus chief executive Philippe Varin.

"They are essential for the future of the business."

Corus workers were told about the job cuts this morning.

The firm said the restructuring work would help it improve annual profits by more than £200m.

"This is a body blow for UK manufacturing," said John Wilson, senior officer of the GMB union.

Newport West MP Paul Flynn said the decision to mothball the Llanwern site was "a bitter blow for the workers and their families".

"There is virtually no alternative for blue-collar workers with skills from the steel industry. It is going to be an extremely difficult period."

And for the Tories, Shadow Work and Pensions Secretary Theresa May said: "This a bitter blow for the thousands of hard working employees at Corus."

Pension closure

Tata Steel said it would also close the main final salary pension scheme for Corus UK workers to new joiners, who will be offered a "money purchase" scheme to join instead.

"While the scheme is in a healthy position, the company will, in line with market practice, close the defined benefit scheme to new recruits, who will be offered a defined contribution scheme," the company said.

"Steps will also be taken to ensure that the company contribution to future service for existing members remains at 12%," it added.

Slump in demand

Steelmakers around the world have been hit by falling demand from carmakers, shipbuilders, construction and heavy engineering sectors, which, in turn, have seen demand for their products drop.

A 40% fall in global demand for steel from its peak of last year caused Corus's order book to drop by more than a third.

And steel prices have fallen by half since last September.

Corus was formed in 1999 through the merger of British Steel and Koninklijke Hoogovens. In 2007, it became a subsidiary of Tata Steel.

The company says it is Europe's second-largest steelmaker, producing 20 million tonnes of crude steel every year.

Its annual revenues are about £12bn ($16.3bn).

Government aid?

Corus has requested financial help from the UK government for a rolling programme to provide new skills to its entire workforce.

"It is essential that the UK government offers this industry the same support being offered to the banking sector because, just like banks, steel is the bedrock of our economy," added Mr Wilson.

Derek Simpson, joint leader of Unite, said his union would not accept any compulsory redundancies.

"We understand that Corus do face difficulties, but before this recession, Corus had been making extremely healthy profits," he said.

"Our members have supported Corus through good times and bad, and now expect Corus to support them."

Link

[Slacker]

They have INTERNAL marketing staff, whose entire job is convincing other Microsoft employees (particularly sales people) how great their products are. Talk about a poor use of money...

Damn, and I thought government work and the auto industry were the only places where they have an internal propaganda division.

When we're talking about a corporation that's pooped out such winners as Windows ME and Vista, are you really surprised?

[Sea Skimmer]

Umm, just about any kind of large corporation that produces products has some kind of internal sales propaganda department, because someone DOES have to make the decision which products will get priority and which ones will die. You can’t just pursue every avenue from start to market. If you’re a corporation that does work for other people, then you’ll still have staff which look at which contracts to take, which to reject, and have to convincing the higher management what the right thing to do is. Smaller corporations do this too, they just don’t have dedicated personal for it.

[Illuminatus Primus]

Brusca said he agreed with many economists' predictions that the recession will end after the second quarter of 2009. Americans might feel the job market start to bounce back a bit sooner than expected, he said.

"These recessions are like geometry," Brusca said. "It looks like we'll have a V-shaped cycle, in that we're going into this with very sharp losses. This intense-phase recession will probably recover fairly quickly, with the job market coming out it at the same angle it came in."

In the short term, the economy and the job market are in trouble, Brusca said. But "it doesn't look like the bottom is falling out of the economy," he said.

And there's a silver lining to the gloomy clouds over America's economy.

"The good news is it's so bad right now that we will have a definite, noticeable recovery when it comes," Brusca said. "We're getting a lot of adjustment out of the way early."

Bwahahahahahhahahaha!!
That's exactly what they said a year ago. The bottom is in, 2nd half recovery, it's all psychological. Pull the other one.
By the 2nd half of this year we'll be looking at over a million job losses every single month.

If you're wrong, can I rub your face in your shit and decry the social evil of economic forecasts? This is why I like Nassim Taleb, at least he has the sense to know the basis for making these predictions is poorly founded and at best he admits he has vague guesses (which could be wrong). Not "this will be true" followed my the same smartass shiteaters coming up with a new set of predictions six months down the line even if they were wrong. Why hasn't CNBC fired all their forecasters? Anyway, if I had to bet (which I wouldn't because I really don't know), I would say that I am erring on the side of caution and suspect that it will be a U-shaped 18-month-plus recession as detailed by Roubini. And we need targeted and emergancy intervention to prevent a L-shaped Japan-style recession. Hopefully Obama can pull it off.

[Phantasee]

Anyway, if I had to bet (which I wouldn't because I really don't know), I would say that I am erring on the side of caution and suspect that it will be a U-shaped 18-month-plus recession as detailed by Roubini. And we need targeted and emergancy intervention to prevent a L-shaped Japan-style recession. Hopefully Obama can pull it off.

18-month-plus recession? Can you link me the specific article by Roubini? When does he start this recession?

[Broomstick]

Re: the title. According to CNN it's now 71,400 jobs lost today, and over 200,000 for the "year" (that is, for January. So far). They also said something about Bloody Monday but let's not panic, ay? Should the title be updated or will we just watch the numbers increase for awhile?

[aerius]

If you're wrong, can I rub your face in your shit and decry the social evil of economic forecasts?

Sure. Go for it.

Anyway, if I had to bet (which I wouldn't because I really don't know), I would say that I am erring on the side of caution and suspect that it will be a U-shaped 18-month-plus recession as detailed by Roubini. And we need targeted and emergancy intervention to prevent a L-shaped Japan-style recession. Hopefully Obama can pull it off.

A U-shaped recession with a recovery starting in 18-24 months is possible only if everything goes just right, in other words:

• Clawback the TAF, TARP, and every other alphabet soup liquidity program
• Force full balance sheet transparency on all banks, all level 2 & 3 assets get marked to market
• If a bank gets toasted by the above, it gets a forced cramdown via a debt to equity swap, and if that's still not enough to recapitalize the bank then it's liquidated by the OTS/FDIC and the depositors are covered
• Glass-Steagall comes back, along with 10:1 leverage limits
• All existing rules and regulations are strictly enforced and violators get sent to a pound'em in the ass prison.
• Spend the stimulus money on infrastructure projects and social care to make sure people have food to eat and a roof over their heads
• Mortgage workouts (principal reduction to 3X income, full doc, fixed rate) are done on primary residences only, cottages, investment properties and so forth can go get fucked
• America's key allies & trading partners do not implode

Miss any of the first 6 and the chances of a U-shaped recession drop drastically, miss any 2 of the first 6 and an L-shaped depression is pretty much guaranteed. The last 2 aren't quite as important but they're still needed for a faster turnaround.

I hope I'm wrong, but I seriously doubt Obama or anyone in the government has the balls to do what's needed. The 2nd half of the TARP has been released and there's another $825 billion in the works, and it ain't headed to the right places. Until I see the steps I've outlined being carried out, conditions are setup for an L-shaped depression, except the L slopes downward.

[Starglider]

It just occurred to me that I've never seen Robert Reich's blog mentioned on SDN; I'd like to point it out, as it has a lot of good, concise entries on US economics, particularly the political aspect (the guy was Clinton's Secretary of Labor). Here's an entry where he asks if the Q4 2008 job losses are starting to make the recession look like a depression. Though he still hasn't convinced me that unions do more harm than good (his argument that their decline is causally linked to pay stagnation only really works in the absence of offshoring).