HP Announcement Pushes Tech Cuts To Highest Level In 3 Years

HEWLETT-PACKARD LAYOFFS WILL PUSH TECH-SECTOR JOB CUTS TO THREE-YEAR HIGH

The looming job-cut announcement by computer maker Hewlett-Packard, which is expected to impact 25,000 to 35,000 workers, would push tech-sector job cuts to its highest level in three years, according to tracking by global outplacement firm. Challenger, Gray & Christmas, Inc.  An HP layoff of 35,000 would bring year-to-date tech-sector job cuts to nearly 50,500.  That exceeds the yearend tech-sector job-cut totals from 2011 (37,038) and 2010 (46,825).  In 2009, technology firms announced 174,629 job cuts, which was the highest annual total since 2005. Continue reading

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66,414 Job Cuts In July On Flurry Of Private Sector Layoffs

A sudden and unexpected burst in private-sector downsizing pushed the number of announced job cuts to a 16-month high of 66,414 in July, according the latest report on downsizing activity released Wednesday by global outplacement consultancy Challenger, Gray & Christmas, Inc.

The 66,414 job cuts last month were up 60 percent from the previous month, when employers announced plans to shed 41,432 workers.  The July figure was 59 percent higher than the 41,676 layoffs recorded in July 2010.  It was the largest monthly total since March 2010, when 67,611 job cuts were announced by the nation’s employers.

The July job-cut surge was dominated by a flurry of large layoffs by a handful of private-sector employers, including Merck & Co., Borders, Cisco Systems, Lockheed Martin and Boston Scientific.  The job cuts from these five companies alone accounted for 38,100 or 57 percent of the July total.

Despite the increase in job cuts last month, the pace of downsizing in 2011 remains slower than 2010, but it is quickly gaining ground.  So far this year, employers have announced 312,220 cuts, eight percent fewer than the 339,353 announced in the first seven months of 2010.  That gap has decreased significantly since the end of the first quarter when year-to-date job cuts were 28 percent lower than the same period a year ago.

“July marks the third consecutive increase we have seen in monthly job-cut announcements, which certainly seems to provide additional evidence that the recovery has stalled.  What may be most worrisome about the July surge is that the heaviest layoffs occurred in industries that, until now, have enjoyed relatively low job-cut levels, including pharmaceuticals, computer and retail,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

The pharmaceutical led all other industries with 13,493 job cuts in July, most of which (13,000 to be exact) resulted from a multi-year reduction in force announced by New York-based Merck & Co.  It was the first time in seven months that government was not the top job-cutting sector.

Government was the third largest job-cutting sector in July behind retail, where employers announced plans to cut 11,245 jobs.  Like the pharmaceutical sector, the retail job cuts were dominated by one employer: Borders, which was forced to liquidate its holdings after failing to right itself through bankruptcy.  The closure of remaining stores and its headquarters will result in 10,700 job losses.

Government agencies, mostly at the state and city level, announced plans to cut 9,389 jobs during the month.  School districts as well as colleges and universities, which were included within the government figures prior to July, announced an additional 1,914 job cuts last month.

Computer peripherals manufacturer Cisco Systems announced plans to cut its workforce by 6,500, bringing the July total for the computer industry to 7,970, which more than triples the number of cuts announced in the industry for the year.  From January through June, computer firms announced just 3,178 job cuts.  With the addition of July’s 7,970, the year-to-date total increases to 11,148.

“It has been a couple of years since we have seen this level of private-sector job cuts coming in a single month.  The spurt of layoff announcements in July also stood out because they came from major employers in bellwether industries, all within a span of a few days.  A casual observer certainly might conclude that the wheels just fell off the recovery wagon,” said Challenger.

“The spate of job cuts should definitely raise some red flags, but it is important to keep the monthly job-cut total in perspective.  Yes, this is the largest job-cut month in over a year, but the last year has seen some of the lowest monthly job-cut totals since the late 1990s.  The 66,000 job cuts recorded last month are still well below the 105,000 job cuts per month averaged between January 2008 and December 2009,” Challenger noted.

The planned workforce reductions announced by Borders, Merck and Cisco — the top three job-cutting companies of the month — were not driven by weakness in the economy, but by factors specific to those companies’ operations.  Borders was unable to compete in an increasingly digital landscape, dominated by Amazon.com and Barnes & Noble.

Merck saw sales and net income increase significantly in the second quarter, but is adjusting its workforce based on increasing competition from generics, which is forcing many drug makers to become leaner and meaner.

Cisco Systems is also facing a more competitive marketplace, while also attempting to recover from efforts to expand into several consumer markets, which proved to be less profitable than planned.

“While none of these job cuts suggest underlying weakness in the economy, there are many signs that the recovery has lost momentum.  Economic growth slowed to a crawl in the second quarter and Wall Street is starting to see layoffs increase as profits slip amid weakening markets.  Goldman Sachs announced 1,000 job cuts in July,” noted Challenger.

Wall Street is seeing additional job losses as several non-U.S. banks announce significant downsizing efforts that will impact bankers here.  British bank HSBC is cutting 30,000 jobs from its global workforce by 2013.  Swiss banks UBS and Credit Suisse could combine to cut as many as 7,000 worldwide.  Barclays and Lloyds of London are also cutting payrolls.

“It is unclear how manyU.S.workers will ultimately be impacted by these global job-cutting efforts.  However, weakness in the financial sector does not bode well for the rest of the economy.  Nor does weakness in the manufacturing sector, which is reporting some of the slowest activity in months,” said Challenger.

“Whether we continue to see job cuts increase could depend on how a deal on the debt ceiling impacts employer confidence.  While some predict that the increased stability a debt-ceiling deal provides will lead to increased hiring, there is a strong possibility that any resulting private sector hiring will be offset by job losses among federal government payrolls,” he said.

 

Download the report here

 # # #

CHALLENGER, GRAY & CHRISTMAS, INC.

JOB-CUT ANNOUNCEMENT REPORT


 

TOP FIVE INDUSTRIES

 
 

Year To Date

 
         
   

2011

2010

 
  Government/Non-Profit*

86,980

106,896

 
  Retail

34,272

26,993

 
  Aerospace/Defense

27,561

8,402

 
  Pharmaceutical

18,264

37,010

 
  Health Care/Products

15,220

16,684

 
         
 

MONTH BY MONTH TOTALS

 
         
   

2011

2010

 

  January

38,519

71,482

  February

50,702

42,090

  March

41,528

67,611

  April

36,490

38,326

  May

37,135

38,810

  June

41,432

39,358

.

  July

66,414

41,676

  August  

34,768

  September  

37,151

  October  

37,986

  November  

48,711

  December  

32,004

  TOTAL

312,220

529,973

 

Some reductions are identified by employers as workers who will take early retirement offers or other special considerations to leave the company.

 

 

 
 

LAYOFF LOCATION

 
 

Year to Date

 
  California  

42,812

 
  New Jersey  

26,512

 
  Michigan  

23,028

 
  Florida  

16,021

 
  Dist. of Columbia  

15,981

 

Listings are identified by the location of the layoff or corporate headquarters as stated in announcement.

Copyright 2011 Challenger, Gray & Christmas, Inc.

 JOB CUTS BY INDUSTRY

 

 

JULY

Year-To-Date

Pharmaceutical

13,493

18,264

Retail

11,245

34,272

Government*

9,389

86,980

Computer

7,970

11,148

Aerospace/Defense

6,704

27,561

Health Care/Products

5,193

15,220

Financial

3,018

14,752

Education

1,914

1,914

Chemical

1,136

2,447

Consumer Products

792

10,082

Telecommunications

745

7,558

Services

735

8,484

Automotive

725

7,269

Industrial Goods

607

11,342

Media

543

4,628

Transportation

434

7,079

Entertainment/Leisure

351

9,783

Non-Profit

350

350

Electronics

342

4,659

Food

331

9,518

Legal

220

2,729

Insurance

90

2,670

Energy

87

3,357

Apparel

1,276

Commodities

0

Construction

4,996

Real Estate

1,244

Utility

2,638

TOTAL

66,414

312,220

 

*Through June, education and non-profit job cuts were included in the category Government/Non-Profit. In July, Challenger separated those categories. They will remain separate from this point forward. Historically, job cuts in those industries will remain tallied together.

JOB CUTS BY REGION, STATE

 

East

33,843

New Jersey

13,330

Connecticut

7,475

Maryland

6,746

New York

2,939

Massachusetts

2,783

Pennsylvania

343

Dist. of Columbia

210

Maine

17

Midwest

15,137

Michigan

10,923

Illinois

1,761

Wisconsin

1,248

Indiana

640

Iowa

315

Ohio

125

Kansas

74

Minnesota

51

West /Southwest

10,823

California

7,698

Oregon

1,215

Texas

799

Washington

540

Arizona

195

Colorado

169

New Mexico

50

South Dakota

49

Nevada

48

Alaska

40

North Dakota

20

South

6,611

Florida

2,955

Tennessee

1,164

N. Carolina

725

S. Carolina

550

Alabama

510

Arkansas

279

Kentucky

127

Virginia

120

West Virginia

100

Louisiana

74

Mississippi

7

JOB CUT REASONS


  JULY YEAR-TO-DATE
Closing

18,127

70,307

Cost-Cutting

13,171

81,391

Competition

13,000

13,150

Restructuring

11,526

63,085

Voluntary Severance

6,663

17,065

Loss of Contract

1,385

6,027

Merger/Acquisition

779

8,670

Demand Downturn

553

12,827

Relocation

487

2,918

Outsourcing

320

2,700

Bankruptcy

172

8,917

Natural Disaster

139

139

Economic Conditions

92

16,152

Funding Loss  

2,992

Government Regulation  

2,446

Legal Trouble  

1,340

Order Cancellation/Reduction  

1,335

Rising Costs  

300

Reorganization/Consolidation  

158

Technological Update  

151

Flooding  

150

TOTAL

66,414

312,220


QUARTER-BY-QUARTER

 

Q1

Q2

Q3

Q4

TOTAL

1989

9,850

10,100

24,085

67,250

111,285

1990

107,052

87,686

49,104

72,205

316,047

1991

110,056

76,622

147,507

221,107

555,292

1992*

110,815

85,486

151,849

151,850

500,000

1993

170,615

84,263

194,486

165,822

615,186

1994

192,572

107,421

117,706

98,370

516,069

1995

97,716

114,583

89,718

137,865

439,882

1996

168,695

101,818

91,784

114,850

477,147

1997

134,257

51,309

95,930

152,854

434,350

1998

139,140

131,303

161,013

246,339

677,795

1999

210,521

173,027

173,181

118,403

675,132

2000

141,853

81,568

168,875

221,664

613,960

2001

406,806

370,556

594,326

585,188

1,956,876

2002

478,905

292,393

269,090

426,435

1,466,823

2003

355,795

274,737

241,548

364,346

1,236,426

2004

262,840

209,895

251,585

315,415

1,039,735

2005

287,134

251,140

245,378

288,402

1,072,054

2006

255,878

180,580

202,771

200,593

839,822

2007

195,986

197,513

194,095

180,670

768,264

2008

200,656

275,292

287,142

460,903

1,223,993

2009

578,510

318,165

240,233

 151,122

1,288,030

2010

181,183

116,494

113,595

118,701

529,973

2011

130,749

115,057

245,806

AVG

214,243

163,205

190,067

229,527

 

 

 

*Estimate based on half-year total. Challenger began tracking job-cut data in 1993.  Before that, it was tabulated by an independent newsletter no longer published.

 

ANNOUNCED HIRING PLANS

 

Industry

Jobs

Retail

2,054

Computer

1,801

Services

1,401

Automotive

1,374

Health Care/Products

940

Energy

816

Electronics

502

Industrial Goods

373

Media

325

Insurance

200

Transportation

200

Financial

190

Government/Non-Profit

164

Telecommunications

140

Apparel

100

Consumer Products

67

Food

37

Education

22

TOTAL

10,706

 

 

 

ANNOUNCED HIRING PLANS

MONTHLY TOTALS

 

 

2011

2010

January

29,492

31,381

February

72,581

8,300

March

10,869

13,994

April

59,648

15,654

May

10,248

14,922

June

       15,498

11,732

July

10,706

8,151

August

14,075

September

123,076

October

124,766

November

26,012

December

10,575

TOTAL

209,042

402,638

 

 Copyright 2011 Challenger, Gray & Christmas, Inc.

 

Are You OVERLY Social-Networked?

As more and more job seekers turn to social and professional networking websites, such as Facebook and LinkedIn, to expand their sphere of potential career-aiding contacts, blogger Tim Bursch suggests that maybe it’s time to start ignoring these networks.

While the Bursch post was written more from a marketing/customer relationship standpoint, the general theme is certainly applicable to job seekers. The point of the piece is that it is easy to get so carried away with the number of networking groups one joins that soon it becomes impossible to maintain meaningful and effective relations with any of them.

Here are the four reasons Bursch gave to start ignoring networks:

1. If you try to be everywhere, you end up really being nowhere. You spend a little time on a lot of networks and end up diluting your brand.
2. Relationships. If you don’t really invest time in one community you will probably only have transactions, instead of long-term relationships.
3. It’s about them. Your fans want to interact and it is about them. So, focus on them well.
4. You can’t please everyone. Some people will be missed. If you have something remarkable, people will find you.

There is a growing risk of spreading oneself too thinly among the expanding number of networking sites for job seekers. While LinkedIn in was once the go-to site, people are dedicating more time to using all of their networks – Facebook, Twitter, MySpace, etc. – for job-search outreach. Additionally, new sites such as KODA.us and the invitation-only Doostang.com appear to be popping up daily.

Bursch’s rules of the marketing-oriented network can be easily adapted for the job seeker. As a job seeker, you are the marketing professional as well as the product. So, the same guidelines can govern your actions as you build your brand among prospective employers.

We would include at least one additional rule: Don’t spend so much time attending to your virtual networks that you neglect your real-world networks.

The Internet has been a boon to job seekers, but it has also become a significant crutch in that it gives a false sense of conducting an “active” job search, even though it is quite “passive.” One feels a great sense of accomplishment after spending five hours a day combing through online job ads and interacting with various networks. Unfortunately, these efforts alone, while necessary, are unlikely to result in much job search success.

Too many job seekers, however, fall into the Internet trap where rejection is easier to accept, whether it’s in the form of an unanswered job application or a networking connection who cannot offer any help.

The active job seeker, on the other hand, is talking to hiring managers on the phone, meeting with people who can help with the job search, and making the effort to go out and find the hidden, unadvertised job opportunities, which account for the vast majority of potential openings. This person is far more exposed to the constant rejection that is the nature of all job searches.

Just as sending out 50 resumes in response to online job ads can feel like the accomplishments of an active job search, maintaining a constant flow of status updates and emails to contacts can make one feel like he or she is a master of networking. However, these activities cannot replace the face-to-face interactions that are critical to building meaningful relationships that will help you achieve your career goals.