Wisconsin company announces layoffs ahead of Biden arrival
OSHKOSH, Wis. - Bad news will greet Vice President Joe Biden when he arrives in Wisconsin Thursday night. Hours earlier, Oshkosh's largest employer announced that it will lay off 450 employees in January.
Oshkosh Corp., a truck manufacturer with Pentagon contracts, blamed the "difficult decisions" on reductions already planned for the nation's defense budget.
"As Oshkosh and others in the defense industry have discussed on numerous occasions, domestic military vehicle production volumes will decline significantly in 2013 due to the reduction in U.S. defense budgets and the fact that military spending is returning to peacetime levels," the company said in a statement. "Unfortunately, these economic factors require Oshkosh to rebalance its defense production workforce starting in January 2013."
The company said the layoffs were not tied to the additional budget cuts that could take effect in January. And it will still have about 3,500 employees in its Oshkosh-based defense division after the job cuts.
The news came hours ahead of Biden's campaign appearance in the city on Friday morning. President Obama carried Winnebago County in 2008, but area Republicans said they believe Mitt Romney will be competitive here on Election Day.
Statewide tracking polls show that while Obama's lead has slipped, he maintains a slight advantage over Romney in Wisconsin.
|Job cuts in US touch highest since 2010|
Bloomberg/ChicagoJob cuts in US touch highest since 2010|
Dow Chemical joined a growing number of companies firing thousands of workers as sluggish US growth and Europe’s deepening recession lead to a persisting slump in sales.
North American companies have announced plans to eliminate more than 62,600 positions at home and abroad since September 1, the biggest two-month drop since the start of 2010, according to data compiled by Bloomberg. Firings total 158,100 so far this year, more than the 129,000 job cuts in the same period in 2011.
Colgate-Palmolive Co. said today it will cut 2,300 jobs, adding to more than 5,500 cuts announced by Dow Chemical, DuPont and Advanced Micro Devices in the past week. The reductions coincide with a majority of US companies missing analysts’ third-quarter revenue estimates and a focus on jobs in the final weeks of the US presidential campaign.
“Companies are saying, ‘Let’s not build up inventories, let’s be lean and mean until we know until we have a better idea of what 2013 is going to look like,’” said Janna Sampson, who helps manage more than $3bn for Oakbrook Investments in Lisle, Illinois. “There is a fear now as companies see that the economic recovery is not picking up.”
So far, out of 235 S&P 500 companies that have released third-quarter earnings, 137 have reported sales that trailed analysts’ estimates, according to data compiled by Bloomberg.
Those results, similar to the S&P 500’s second-quarter performance, signal employers may increase firings over the next two quarters, according to John Challenger, chief executive officer of Challenger, Gray & Christmas, a human resources consulting firm based in Chicago.
Sales misses are “a sure prescription for layoffs starting to heat up as companies take immediate action to show their shareholders how responsive they are,” Challenger said on Wednesday by telephone.
The US unemployment rate fell below 8% in September for the first time since January 2009, and a surge in firings may counteract job gains elsewhere in the economy.
The technology hardware and equipment industry has announced the most job reductions among North American companies this year with 41,200, led by Hewlett-Packard’s announcement in September that it plans 29,000 cuts, more than it originally disclosed. Banks are next with plans to eliminate more than 19,000 positions, according to Bloomberg data.
AMD, the second-largest maker of processors for personal computers, said last week it will cut 15% of its staff, or about 1,665 jobs, after forecasting fourth-quarter sales that fell short of analysts’ estimates.
Restructuring measures designed to trim annual costs by about $190mn are “difficult but necessary steps to ensure our plan has the right scale and scope to address the market and competitive challenges we now face,” Rory Read, chief executive officer of the Sunnyvale, California-based company, said on an October 18 conference call.
Colgate, the maker of Speed Stick deodorant and Irish Spring soap, said it will eliminate about 6% of its 38,600 jobs over four years after third-quarter revenue missed estimates. The New York-based company reported sales of $4.33bn, short of the $4.38bn projected by analysts.
The closing of about 20 plants in the US and abroad will eliminate about 2,400 jobs, Midland, Michigan-based Dow Chemical said this week. DuPont, based in Wilmington, Delaware, plans to trim 1,500 jobs after third-quarter profit trailed analysts’ estimates and it reduced its full-year forecast.
Earlier this month, Cummins, a Columbus, Indiana-based engine maker, said it expects to erase as many as 1,500 jobs by the end of 2012 and lowered its forecasts for sales and profit.
“A lot of companies have been positioned for continued growth and we’re seeing some stagnation or a modest decline,” Andy Kaplowitz, a New York-based industrial analyst for Barclays, said in a telephone interview on October 24.
US companies are also restructuring European operations to stem the slowdown. Kimberly-Clark said this week it plans to cut manufacturing and administrative operations as it exits the diaper business in western and central Europe, except for Italy, to concentrate on faster-growing regions. The Dallas- based company didn’t say how many workers may lose their jobs.
In contrast, Dearborn, Michigan-based automaker has added more than 6,500 hourly jobs and 900 salaried positions in the US this year, Todd Nissen, a spokesman, said in e-mails.
Companies based in western Europe have also accelerated large-scale job reductions this year as the recession in the European Union worsens. Services and manufacturing shrank more than economists forecast in October and business confidence in Germany, Europe’s biggest economy, dropped to the lowest in more than 2 1/2 years.
“We’re seeing uncertainty about whether Europe will make it or not,” Diane Swonk, chief economist for Mesirow Financial Holdings Inc in Chicago, said in an interview.
Among western European companies, there have been 47 job- cut announcements so far this year involving at least 1,000 workers, compared with 32 in the same period of 2011, according to the data compiled by Bloomberg. The peak month was July, with 39,800 firings. That brings the year-to-date total for the region’s companies to 165,700, up from 162,420 in the same period a year earlier, the data show.
Alcatel-Lucent, the Paris-based phone-equipment maker whose stock is trading near a 23-year low, said last week it plans to trim 5,500 positions worldwide, including about 1,400 in France. The reductions will primarily affect sales, marketing and administrative employees, said Simon Poulter, a spokesman.
Lighting company Royal Philips Electronics, based in Amsterdam, is eliminating 2,200 additional jobs to wring out an extra €300mn ($389mn) as economic conditions deteriorate. Munich-based Siemens, the maker of high-speed trains, turbines and medical gear, has identified about 8,000 potential cuts globally, and the number that may reach 10,000 by year-end, a person familiar with the plan said this month.
Back in the US, companies are hesitant to expand until they know the result of the presidential election and how lawmakers will handle the so-called fiscal cliff, or the $607bn in tax increases and spending cuts set to take effect in January if Congress doesn’t intervene. Inaction probably would cause a recession in the first half of 2013, according to the Congressional Budget Office.
The world’s largest economy probably grew at a 1.8% annual rate in the third quarter after expanding at a 1.3% pace in the previous three months, according to the median forecast of economists surveyed by Bloomberg before an October 26 Commerce Department report. It would be the first back- to-back readings lower than 2% since the US was emerging from the recession in 2009.
“We are operating in a world where demand is still very weak,” Jeff Fettig, CEO of Benton Harbor, Michigan-based Whirlpool Corp, said in an October 23 interview. The world’s largest appliance maker boosted its 2012 adjusted earnings forecast this week, helped by the elimination of 5,000 jobs in the past year.
With assistance from Shruti Singh in Chicago, Stefan Riecher in Frankfurt, Simone Meier in Zurich, and Carlos Torres and Alex Kowalski in Washington.