Summer, typically a leisurely time of long weekends and barbeques, has this year brought with it a barrage of job cuts.
The slew of high-profile, large U.S. layoff announcements — which now number more than 200,000 — could mark the end of the current U.S. economic growth cycle, according to Challenger, Gray & Christmas Inc.
“We may have reached the tipping point for this period of lacklustre economic expansion,” said John Challenger, chief executive officer of the Chicago-based executive-placement firm, which also tracks U.S. employment trends.
He said the forces slowing the U.S. economy — rising energy prices, health care costs, interest rates and tougher global competition — are leading to layoffs at a number of “once-dominant” U.S. companies.
“If the summer surge proves to be the first sign of an eventual economic slowdown, this would be among the weakest expansions in recent times, particularly when compared to the boom of the 1990s,” the Challenger report said.
Although the summer months are generally light on staff reductions, nearly 200,000 were unveiled in May and June of 2005, the Challenger report noted. In fact, summer layoffs are on track to match or surpass those announced in the first four months this year, a period of typically much-heavier downsizing.
Between 1993 and 2004, the number of job cuts between May and August were 20 per cent below the number announced in the first four months of the year, and 26 per cent below the number announced during the last four months of the year, Challenger said.
This year, however, staff cuts rose by 42 per cent in May and 35 per cent in June from April, according to Challenger's research.
“Summer is typically a time when we see a drop off in job cuts, but this year... five out of the six largest job cuts announced so far this year have occurred since May,” said Challenger.
In addition, the Challenger noted that most of the job cuts have been large, with individula companies cutting payrolls by more than 10,000 workers.
Last Friday, Kimberly-Clark Corp. — maker of Scott tissues and Huggies diapers — said it plans to do away with as many as 6,000 jobs. The job cuts — which will be completed by the end of 2008 — will streamline manufacturing and administrative operations, mainly in North America and Europe.
Employees of Eastman Kodak Co. are also bracing for pink slips. The photography company, which lost money again in its most recent quarter, has been struggling to transform its traditional film operations amid the new wave of digital products.
Last week, Kodak raised its job-cut target to 22,500 to 25,000 workers from an earlier target of 12,000 to 15,000, more than a third of its work force. It also said it would do away with two-thirds of its global manufacturing “assets.”
At Hewlett-Packard Co., newly-appointed CEO Mark Hurd also dropped the axe. The computer and printer maker plans to eliminate 14,500 jobs, or nearly 10 per cent of its work force.
Other recent U.S. job cutters include automotive giant Ford Motor Co., medical instrument maker Beckman Coulter Inc., and Hershey Co., the largest U.S. chocolate maker.
