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Job cut announcements still surging

Job cut announcements still surging
July layoffs nearly 50% higher than last year, report says
09:38 PM CDT on Wednesday, August 3, 2005
By DANIELLE DiMARTINO / The Dallas Morning News

The spring and summer surge in layoff announcements continued into July, outplacement firm Challenger, Gray & Christmas said Wednesday.

For the second consecutive month, announced job cuts surpassed 100,000, coming in at 102,971. Still, that was 7 percent lower than June's 110,996.

Layoffs since May now total 296,250, something John Challenger, chief executive of the firm, said is highly unusual for warm-weather months.

July job cuts were nearly 50 percent higher than last year, when employers announced plans to shed 69,572 positions.

For the year, a total of 641,245 job cuts have been announced, 18 percent higher than last year. At the current rate, cuts will surpass the 2004 total and come in above the 1 million mark for a fifth straight year.

In July, the consumer products, computer and financial industries ranked highest among shrinking sectors. This trend flies in the face of what would be expected out of these particular sectors.

"One would expect [these] employers ... to be adding workers by the boatload in an expanding economy," Mr. Challenger said.

For the year, the suffering auto sector tops the list of the most struggling industries.

"If job cuts in the auto industry continue and we start to see consistently high job-cut numbers from the top three job cutters in July, it should set off some relatively loud alarm bells about the state of the job market and the economy," Mr. Challenger added.

Mr. Challenger said some of the layoffs announced will prove to be beneficial to companies' bottom lines in the end.

"Some of the cuts we see are of a strategic nature and not necessarily a sign of a weakening economy," he said. "Kimberly-Clark is a good example of a company on good footing that is paring its workforce to improve efficiency and boost parts of the business that show the most promise. In this case, the job cuts are a proactive measure to ensure continued success.

"Unfortunately, we see a number of job cuts that are reactive in nature, that is, the company is on the defensive and cutting jobs simply to stay profitable. In these situations, the company is floundering and the odds are in favor of additional job cuts in the near future."

Mr. Challenger cited Ford Motor Co. as a member of the defensive camp. The automaker announced several small job cuts this year. Speculation is swirling, though, that as many as 10,000 more cuts may be in the making, affecting mainly its salaried workforce.

In a separate report Wednesday morning, the employment component of the Institute for Supply Management nonmanufacturing survey showed slightly fewer employers increasing hiring in July and the same number as June reporting that they were laying off workers.

Any downside surprise in this Friday's July labor market report could well stem back to the spike already seen in May and June. The key jobs report is due Friday morning at 7:30 a.m. Dallas time.

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LINK: http://www.dallasnews.com/sharedcontent/dws/bus/stories/080405dnbuschallenger.1758bd22.html