Signs Of The Apocalypse: The Return Of The Layoff

[marmar]

from 24/7WallStreet:



Signs Of The Apocalypse: The Return Of The Layoff
Posted: January 25, 2010 at 4:43 am


Layoffs in unrelated industries, even when close together in time, are just that—unrelated. That is until they begin to grow rapidly in number.

Three of America’s largest firm announced firings or signaled them during the last week. Wal-Mart (NYSE:WMT) cut the deepest, which is frightening because it is the most financially healthy company in the world. In a surprise announcement, the world’s largest retailer said it would cut 10% of its Sam’s Club division, which means nearly 12,000 workers will get axed. The news cannot be good for the staggering retail sector. Christmas was weak, but Wall St. assumed that Wal-Mart was doing as well as if not better than its smaller competitors. The Wal-Mart move will give other retail firms “permission” to take fresh looks at their staff levels without the stigma of announcing firings ahead of other large store chains.Xerox (NYSE:XRX) also unexpectedly said it would cut 2,500 people. It did so at the same time as it posted good earnings. That means Xerox believes that it can still wring more productivity from the people it will continue to use. The tech sector is still on a bumpy ride while consumers and IT managers try to decide if they can afford to upgrade to new equipment. The beginning of 2010 could cause a fresh round of reviews of how much blood can be squeezed from the employment pool stone. Large firms that made layoffs last year can now look at four quarters of what those layoffs have done to them or for them financially. If cuts worked once, they might work again.

Oracle (ORCL) is close to closing its deal to buy Sun Micro. Sun’s remarkable history of large layoffs is an example of what happens to a company when its products lose most of their relevance and R&D efforts cannot bring the firm back into alignment with customers demands. Sun will now become one of the many divisions of Oracle and that almost certainly means that many management and sales people will be gone by the end of the quarter.

The early part of 2009 was marked by an unprecedented number of large cuts as America’s most well-known companies. In some weeks over 100,000 American were put out of work by “downsizings” at these firms. That process has slowed a year later, but there is a growing body of evidence that it is not going away.

The most critical difference between last year and this is that 10% of Americans, 17% by some measures, are without jobs. The economy has not started to add new jobs yet. Each person that a Wal-Mart, Xerox, or Oracle lets go now is put into jobless pool with a record low number of openings for each job seeker. That means there is no Dutch Boy at the dike to prevent the ongoing effects that unemployment has on housing, credit, and the government’s ability to improve income to the IRS.

The employment mess, a tragedy beyond description, is still going on.


-- Douglas A. McIntyre


http://247wallst.com/2010/01/25/signs-of-the-apocalypse-the-return-of-the-layoff/

[doc03]

1. That was very disturbing when I heard Walmart was laying

off 12,000 employees. If Walmart can't make it we are in dire straights.

[endless october]

4. eventually even Walmart's outsourced crap isn't cheap enough.

[elehhhhna]

6. here's a couple things about that --

It's Sam's that is laying off. IIRC, Sam's biggest customers are small businesses -- for office supplies to t.p. to food-by-bulk to small restaurants. These business are hurting & so is Sam's.

2, they're outsourcing these jobs (part time, low wage) to a contracting company...so these benefitless part time gigs still will exist.

[FarCenter]

7. Why does Sams Club have people giving away samples and doing demos?

Are they trying to compete with Williams Sonoma?

[Hannah Bell]

14. costco does the same. i think that's their competition. plus, they're going to continue

doing it. they're just "outsourcing". to another arkansas based corp which specializes in it -- but i'd bet, if you look at the finances, wal-mart has some kind of connection to this corp.

my speculation would be there are either tax advantages or the labor comes cheaper.

[FarCenter]

15. Looks like WalMart is pushing the costs to its suppliers

Shopper Events is a small company in Rodgers which appears to just adminster the programs for WalMart
http://www.shopperevents.com/about.html

The programs are actually carried out by Advantage Sales & Marketing LLC http://www.asmnet.com/AboutUs/Pages/default.aspx
and by CROSSMARK http://www.crossmark.com/Who-We-Are.html

From the discriptions of the latter, they appear to do this on behalf of the consumer packaged goods manufacturers.

This looks like a way for Sams Club to push the costs of demo and sample operations off on the consumer packaged goods manufacturers.

[JVS]

18. Because when customers are buying food by the 6 lb sack, they aren't eager to experiment

Trying something new that you see in Sam's club is likely to cost you more than $10. As a result, impulse buys become quite rare and most people who shop there have a set of staples that they go for and then get out before it gets expensive. If you can convince someone to add a new item to this list of staples, you'll make that sale each time they make a run. So it's worth it to have people handing out samples and getting people to know what the product is like and hopefully they'll like it enough to buy.

[NightWatcher]

2. "I'm getting better" the economists keep saying

How many million more jobs will be put on the cart? How much longer can the state's keep paying out Unemployment Claims? Half of the states are out of money in their unemployment reserves and have had to borrow from the feds. http://www.truthdig.com/eartotheground/item/half_of_states_ran_out_of_unemployment_funds_20100120/

[Octafish]

3. The Street reacted favorably.

Less "overhead" to take away from the bottom line and the CEO's take.

[TexasObserver]

5. RETAIL is undergoing a huge transition. Online ordering is the wave.

Walmart is taking on Amazon and other online retailers, and that's where the new battleground will be, as all major retailers try to get slim to survive. This is the quarter to cut costs as much as possible. It's a long haul to next Christmas, and the first quarter figures to be weak, as people try to pay for the things they bought for Christmas.

We really, really need a jobs program to get people working now. I had been hopeful we might turn the corner on unemployment with the Christmas boost, but it looks like we will continue to lose jobs until summer.

We need a second stimulus package, and we need it now. If we don't get a second stim package passed and out there by summer, we're taking a beating in November.

[marmar]

8. Yes, definitely. ..... There is definitely something rather dramatic going on w/retail.

The ranks of the ghost malls and half-abandoned strip malls will swell.

[butterfly77]

10. But,But,the teabaggers and the repubs say..

We are doing to much spending and that they are worried about the deficit so,they need another tax cut so that they can bring more jobs but, didn't they get tax cuts in the first recovery package and every other bill that they have been voting on ?

Over and over they tell us that we are doing too much spending and then in the next breath they tell us we need to spend some more for wars as they try to create situations for more war or something to do with NASA...

[HughBeaumont]

9. Sooo . . . any ideas from the Grand Offshoring Party as to how we'll fix THEIR mess?

Do we just straight NOT tax corporations at all and simply . . . "let do"?

Do we just continue to give corporations and the wealthy that run them their every wish and desire, hoping that someday they'll be benevolent and start hiring American workers?

Oh wait, we're already giving them everything they want. The top marginal tax rate is the lowest it's been in 75 YEARS. Their total compensation packages amount to yearly lottery winnings.

I mean, with all of this massive concentration of wealth and for all the wage increases and benefits we've sacrificed to please and please and please them again and again and again, SURELY we should be swimming in jobs by now!

But guess what, suckers. WE'RE NOT.

And your goddamned Friedman one-armed bandit has come up Cherry|Lemon|Bar for DECADES.

So tell me again, TeaShitters, how exactly is giving your asshole party of shitbags the reins again going to make the 5,000 scumfucks who run this country to stop being so goddamned greedy and START HIRING AGAIN? How are your shitty economic strategies, which we gave you 28 YEARS worth of chances to make work, going to get us out of this when it was those very strategies that choked the life out of the middle/working/poor classes in the first place?

I, for one, am ALL ears.

[RC]

11. Why is no one, and I mean absolutely no one trying to do what William Jefferson Clinton accomplished...

He had the economy booming for the middle class. Low unemployment, living wage jobs that a family could actually live on. Low inflation. He even had Israel and Palestine with in days or weeks of a peace agreement.

Then along cam george and before the door was barely closed behind him, was bragging about being the first war president of the 21 century. And is has been down hill ever since.

[marmar]

12. But a lot of that was a chimera, fueled by credit- and housing-bubbles....

...... And while the Bush era torpedoed any Clinton-era progress, I think it's too easy to look back at the 1990s with rose-colored glasses. A lot of what happened then Glass-Steagal, NAFTA, the credit explosion - contributed to this mess.

[hughee99]

17. Exactly, does another credit, housing or tech bubble fix the problem

or just make for a harder crash later?

[Hannah Bell]

13. did i call it, or what? "uptick in unemployment following the holiday".

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x7370358#7370623

[Kingofalldems]

16. This might be the start of an election year trick

by the GOP. Never trust them.