Ten days ago, companies around the world canned 40,000 workers. Today CEOs around the world upped the ante -- firing 62,000 people in a day. Can 100,000 layoffs in a single day be far away?
Here are eight companies contributing to today's casualties:
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20,000 cuts at Caterpillar Inc. (NYSE: CAT), a maker of construction and mining machinery;
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8,000 jobs at the wireless provider Sprint Nextel Corporation (NYSE: S);
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7,000 workers at The Home Depot, Inc. (NYSE: HD);
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8,000 from the expected merger of the pharmaceutical makers Pfizer, Inc. (NYSE: PFE) and Wyeth (NYSE: WYE)2,000 at General Motors Corporation (NYSE: GM) which will cut shifts at plants in Michigan and Ohio.7,000 at European banking and insurance group ING;6,000 at Philips, the electronics company; and3,500 at steel maker Corus.
These massive cuts are global and they transcend industries. They suggest that a global deflationary spiral could be underway. As I posted, it involved the following steps:
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1. Excess inventory,
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2. Price cuts,
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3. Capacity and job reductions,
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4. Less spending power,
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5. Lower demand -- followed by a return to step 1.
It may be some time before it exhausts itself. In the meantime, people are cutting back on spending as they anticipate the ax. That will just make the cuts deeper and sooner. But it can't be stopped.
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and is the author of You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He has no financial interest in the securities mentioned.
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Reader Comments (Page 1 of 1)
1-26-2009 @ 4:41PM
BHarrison said...
. . . . and we are STILL only in the beginning phases of the economic meltdown . . . neither Congress, nor business have come up with ANY concrete viable plan that has accomplished ANYTHING to date, have they?
Until then, we are just in the initial phases of the meltdowns. The economy HAS to "hit bottom" BEFORE a recovedry can begin . . . and we are still FAR from the "bottom" of all of this which will continue on for at least 18 -24 months, and perhaps longer.
Congress is the key to it all in getting reasonable and prudent regulations issued and effective oversight to INSTILL INTEGRITY in the corporations and the markets in their financial statements. Who is going to invest in a corrupt and manipulated market with corporations with CORRUPT and misleading fianancial statements? No rational person is going to do that, are they? Congress has to act expeditiously or nothing much is going to improve.
1-26-2009 @ 5:28PM
Sarah said...
Relax because there is good in all of this. First of all, Hollywood actors are getting a 50% pay cut, (it took this for the public to get smart). Secondly, people can't afford to get those divorces now that their paycheck of a spouse has no job. Thirdly, women won't be so quick to give away the farm for free when there's no husband to be had at their employment place. Fourthly, all of those living the high life making you look like a loser for being responsible lost it all. Go out and enjoy the clean air, you can finally see the clouds. Oh, and why am I okay, because I got MARRIED to a man with 3 substantial degrees who didn't look for a paycheck for a marriage partner, or should I say roommate with benefits. Here he is, look at that sweet face...if they don't kill you in one way they'll kill you in another:
http://newsimg.bbc.co.uk/media/images/42339000/jpg/_42339087_kaczynski_afp_book1962_300.jpg
1-26-2009 @ 7:57PM
william lindblad said...
Sarah - in the 30's people threw rocks at Doris Duke. She died rich.
BHarrison - yo right. it's still on the way.
I expect about Sept.
Peter, so what else is knew?
You're in good shape, looks like they are going to do another RTC. Experience will be in demand.
If you want it screwed up right - do it yourself
2-20-2009 @ 3:08PM
linktvoutreach said...
This is far from just a domestic problem. Downsizing and industry shrinkage is exceeding projections globally.
2-20-2009 @ 3:10PM
linktvoutreach said...
You can see the global ramifications here:
http://www.linktv.org/video/3606
It's an interesting quick view of the scope of layoffs globally.