Major Firms Slash Tens Of Thousands Of Jobs
NPR.org — The list of companies announcing layoffs amid the deepening recession continued to grow Monday, with Caterpillar, Home Depot, Sprint, Royal Philips Electronics, drugmaker Pfizer and GM announcing they would shed tens of thousands of jobs.
The announcements coincide with a survey released by the National Association for Business Economics, or NABE, that shows the worst business conditions in more than a quarter-century and the likelihood of many more job losses in coming months.
Caterpillar Inc., the world's largest maker of mining and construction equipment, said Monday that its fourth-quarter profit plunged 32 percent amid a global downturn in new building and demand for raw commodities. It will cut 20,000 employees, contract and agency workers.
The Home Depot Inc., whose business has been badly hit by plunging home values, said it would lay off 7,000 employees, or 2 percent of its work force. The Atlanta-based retailer will close its 34 Expo Design Centers and more than a dozen other stores. The company also plans to shed 2,000 nonstore jobs and freeze the pay of its officers.
Sprint Nextel Corp., the No. 3 U.S. mobile service provider, will cut up to 8,000 jobs, or about 14 percent of its work force, as part of a plan to reduce labor costs by $1.2 billion a year. Last month, Sprint's larger rival, AT&T Inc., said it would eliminate 12,000 jobs, or about 4 percent of its staff.
Philips Electronics announced it would cut 6,000 jobs.
General Motors Corp., which has already experienced deep cuts, will trim another 2,000 jobs at plants in Michigan and Ohio, and it halt production for several weeks at nine plants over the next six months due to slow sales, the company said.
Meanwhile, New York-based Pfizer announced a merger plan in which it will acquire rival Wyeth. It accompanied that news with the announcement it would cut 8,000 jobs as a result of a patent expiring on its top-selling cholesterol drug, Lipitor.
In its survey, NABE showed that 39 percent of businesses surveyed planned to eliminate jobs through attrition or "significant" layoffs over the next six months. That was up from 32 percent in an October survey. Around 45 percent in the current survey anticipated no change in hiring plans, while roughly 17 percent thought hiring would increase.
The report "depicts the worst business conditions since the survey began in 1982, confirming that the U.S. recession deepened in the fourth quarter of 2008," said Sara Johnson, NABE's lead analyst on the survey and an economist at IHS Global Insight.
Home sales were up unexpectedly in December, according to a report by the National Association of Realtors out Monday; however, prices continued to plunge. Sales of existing homes rose 6.5 percent. But the median price plunged to $175,400, down 15.3 percent from the year before.
As President Obama and his advisers were trying to sell a $825 billion economic stimulus package on Capitol Hill, the Federal Reserve was to meet this week in an effort to free-up lending. But it's unclear what the Fed can do after exhausting interest-rate cuts that are already near zero.
The Fed, which will issue a policy statement around 2:15 p.m. EST Wednesday at the end of a two-day meeting, is expected to repeat an assurance that rates will remain exceptionally low for some time and to issue guidance on how aggressively the Fed will keep supporting credit markets by expanding its balance sheet.
Meanwhile, Obama's economic team is working to overhaul its response to the worsening home foreclosure and bank crisis. Timothy Geithner, the president's nominee for Treasury secretary, told Congress last week that Obama would lay out his strategy in the next few weeks.
Obama said Monday that the nation cannot afford "distractions" or "delays" when it comes to the economic stimulus plan working its way through Congress. The government needs to act with a "sense of urgency," he said.
Obama said the job losses mean more working men and women "whose families have been disrupted and whose dreams have been put on hold."
From NPR staff and wire reports.
This program aired on January 26, 2009. The audio for this program is not available.