With the economy in "shambles," Warren Buffett's Berkshire Hathaway (NYSE: BRK.A) spent a good chunk of last year cutting jobs. Not including the company's acquisition of Marmon Holdings, Berkshire shrunk its number of employees by 2% during 2008.Among the hardest hit subsidiaries were Clayton Homes and Shaw Industries, which cut their workforces by 16% and 6.2% respectively. Buffett gives the executives in charge of the operating companies tremendous autonomy over their operations, so it's entirely possible that he personally had no role in the decision to cut staff.
But still: Warren Buffett's willingness to let his company shrink its workforce when necessary shows that he realizes that job cuts are sometimes a good thing, no matter how much personal hardship they cause in the lives of the affected workers. By shrinking the payroll when it makes sense, Berkshire makes itself a more efficient operation and that's better for the broader economy in the long run.
There's a lot of political pressure to continue pumping cash into General Motors (NYSE: GM) and Chrysler, much of it motivated by a noble but misplaced desire to "preserve jobs." But as Warren Buffett, one of the most compassionate capitalists on the planet, knows, a job that isn't creating value for the employer is best eliminated, with the resources deployed elsewhere.
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