Job Cuts Surge 60% to 16-Month High

Job Cuts Surge 60% to 16-Month High
PLANNED JOB CUTS REACH 66,414 IN JULY IN FLURRY OF PRIVATE SECTOR LAYOFFS
CHICAGO, August 3, 2011 - A sudden and unexpected burst in private-sector downsizing pushed the number of announced job cuts to a
16-month high of 66,414 in July, according the latest report on downsizing activity released Wednesday by global outplacement consultancy
Challenger, Gray & Christmas, Inc.

The 66,414 job cuts last month were up 60 percent from the previous month, when employers announced plans to shed 41,432 workers. The July figure was 59 percent higher than the 41,676 layoffs recorded in July 2010. It was the largest monthly total since March 2010, when 67,611 job cuts were announced by the nation's employers. 

The July job-cut surge was dominated by a flurry of large layoffs by a handful of private-sector employers, including Merck & Co., Borders, Cisco
Systems, Lockheed Martin and Boston Scientific. The job cuts from these five companies alone accounted for 38,100 or 57 percent of the July total.

Despite the increase in job cuts last month, the pace of downsizing in 2011 remains slower than 2010, but it is quickly gaining ground. So far this year, employers have announced 312,220 cuts, eight percent fewer than the 339,353 announced in the first seven months of 2010. That gap has decreased significantly since the end of the first quarter when year-to-date job cuts were 28 percent lower than the same period a year ago.

"July marks the third consecutive increase we have seen in monthly job-cut announcements, which certainly seems to provide additional
evidence that the recovery has stalled. What may be most worrisome about the July surge is that the heaviest layoffs occurred in industries that, until now, have enjoyed relatively low job-cut levels, including pharmaceuticals, computer and retail," said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

The pharmaceutical led all other industries with 13,493 job cuts in July, most of which (13,000 to be exact) resulted from a multi-year reduction in force announced by New York-based Merck & Co. It was the first time in seven months that government was not the top job-cutting sector.

Government was the third largest job-cutting sector in July behind retail, where employers announced plans to cut 11,245 jobs. Like the
pharmaceutical sector, the retail job cuts were dominated by one employer: Borders, which was forced to liquidate its holdings after failing to right itself through bankruptcy. The closure of remaining stores and its headquarters will result in 10,700 job losses.

Government agencies, mostly at the state and city level, announced plans to cut 9,389 jobs during the month. School districts as well as colleges and universities, which were included within the government figures prior to July, announced an additional 1,914 job cuts last month.  


Computer peripherals manufacturer Cisco Systems announced plans to cut its workforce by 6,500, bringing the July total for the computer industry to 7,970, which more than triples the number of cuts announced in the industry for the year. From January through June, computer firms announced just 3,178 job cuts. With the addition of July's 7,970, the yearto-date total increases to 11,148.

"It has been a couple of years since we have seen this level of privatesector job cuts coming in a single month. The spurt of layoff
announcements in July also stood out because they came from major employers in bellwether industries, all within a span of a few days. A casual observer certainly might conclude that the wheels just fell off the recovery wagon," said Challenger.

"The spate of job cuts should definitely raise some red flags, but it is important to keep the monthly job-cut total in perspective. Yes, this is the
largest job-cut month in over a year, but the last year has seen some of the lowest monthly job-cut totals since the late 1990s. The 66,000 job cuts recorded last month are still well below the 105,000 job cuts per month averaged between January 2008 and December 2009," Challenger noted.

The planned workforce reductions announced by Borders, Merck and Cisco -- the top three job-cutting companies of the month -- were not driven by weakness in the economy, but by factors specific to those companies' operations. Borders was unable to compete in an increasingly digital landscape, dominated by Amazon.com and Barnes & Noble.

Merck saw sales and net income increase significantly in the second quarter, but is adjusting its workforce based on increasing competition from generics, which is forcing many drug makers to become leaner and meaner. Cisco Systems is also facing a more competitive marketplace, while also attempting to recover from efforts to expand into several consumer markets, which proved to be less profitable than planned.

"While none of these job cuts suggest underlying weakness in the economy, there are many signs that the recovery has lost momentum.
Economic growth slowed to a crawl in the second quarter and Wall Street is starting to see layoffs increase as profits slip amid weakening markets. Goldman Sachs announced 1,000 job cuts in July," noted Challenger. Wall Street is seeing additional job losses as several non-U.S. banks announce significant downsizing efforts that will impact bankers here. British bank HSBC is cutting 30,000 jobs from its global workforce by 2013. Swiss banks UBS and Credit Suisse could combine to cut as many as 7,000 worldwide. Barclays and Lloyds of London are also cutting payrolls.

"It is unclear how many U.S. workers will ultimately be impacted by these global job-cutting efforts. However, weakness in the financial sector
does not bode well for the rest of the economy. Nor does weakness in the manufacturing sector, which is reporting some of the slowest activity in months," said Challenger.

"Whether we continue to see job cuts increase could depend on how a deal on the debt ceiling impacts employer confidence. While some predict that the increased stability a debt-ceiling deal provides will lead to increased hiring, there is a strong possibility that any resulting private sector hiring will be offset by job losses among federal government payrolls," he said.

 
CHALLENGER, GRAY & CHRISTMAS, INC.
JOB-CUT ANNOUNCEMENT REPORT
TOP FIVE INDUSTRIES
Year To Date

2011 2010
Government/Non-Profit* 86,980 106,896
Retail 34,272 26,993
Aerospace/Defense 27,561 8,402
Pharmaceutical 18,264 37,010
Health Care/Products 15,220 16,684

MONTH BY MONTH TOTALS

2011 2010
January 38,519 71,482
February 50,702 42,090
March 41,528 67,611
April 36,490 38,326
May 37,135 38,810
June 41,432 39,358 .
July 66,414 41,676
August 34,768
September 37,151
October 37,986
November 48,711
December 32,004
TOTAL 312,220 529,973
Some reductions are identified by employers as workers who will take early retirement offers or other special considerations to leave the company.
LAYOFF LOCATION
Year to Date
California 42,812
New Jersey 26,512
Michigan 23,028
Florida 16,021
Dist. of Columbia 15,981
Listings are identified by the location of the layoff or corporate headquarters as stated in announcement.
 
CHALLENGER, GRAY & CHRISTMAS, INC.
JOB-CUT ANNOUNCEMENT REPORT
JOB CUTS BY INDUSTRY
JULY Year-To-Date
Pharmaceutical 13,493 18,264
Retail 11,245 34,272
Government* 9,389 86,980
Computer 7,970 11,148
Aerospace/Defense 6,704 27,561
Health Care/Products 5,193 15,220
Financial 3,018 14,752
Education 1,914 1,914
Chemical 1,136 2,447
Consumer Products 792 10,082
Telecommunications 745 7,558
Services 735 8,484
Automotive 725 7,269
Industrial Goods 607 11,342
Media 543 4,628
Transportation 434 7,079
Entertainment/Leisure 351 9,783
Non-Profit 350 350
Electronics 342 4,659
Food 331 9,518
Legal 220 2,729
Insurance 90 2,670
Energy 87 3,357
Apparel 1,276
Commodities 0
Construction 4,996
Real Estate 1,244
Utility 2,638
TOTAL 66,414 312,220
*Through June, education and non-profit job cuts were included in the category Government/Non-Profit. In July, Challenger separated those categories. They will remain separate from this point forward. Historically, job cuts in those industries will remain tallied together.
 
CHALLENGER, GRAY & CHRISTMAS, INC.
JOB-CUT ANNOUNCEMENT REPORT
JOB CUTS BY REGION, STATE
East 33,843
New Jersey 13,330
Connecticut 7,475
Maryland 6,746
New York 2,939
Massachusetts 2,783
Pennsylvania 343
Dist. of Columbia 210
Maine 17
Midwest 15,137
Michigan 10,923
Illinois 1,761
Wisconsin 1,248
Indiana 640
Iowa 315
Ohio 125
Kansas 74
Minnesota 51


CHALLENGER, GRAY & CHRISTMAS, INC.
JOB-CUT ANNOUNCEMENT REPORT
JOB CUTS BY REGION, STATE
West /Southwest 10,823
California 7,698
Oregon 1,215
Texas 799
Washington 540
Arizona 195
Colorado 169
New Mexico 50
South Dakota 49
Nevada 48
Alaska 40
North Dakota 20
South 6,611
Florida 2,955
Tennessee 1,164
N. Carolina 725
S. Carolina 550
Alabama 510
Arkansas 279
Kentucky 127
Virginia 120
West Virginia 100
Louisiana 74
Mississippi 7
 
CHALLENGER, GRAY & CHRISTMAS, INC.
JOB-CUT ANNOUNCEMENT REPORT
JOB CUT REASONS
JULY YEAR-TO-DATE
Closing 18,127 70,307
Cost-Cutting 13,171 81,391
Competition 13,000 13,150
Restructuring 11,526 63,085
Voluntary Severance 6,663 17,065
Loss of Contract 1,385 6,027
Merger/Acquisition 779 8,670
Demand Downturn 553 12,827
Relocation 487 2,918
Outsourcing 320 2,700
Bankruptcy 172 8,917
Natural Disaster 139 139
Economic Conditions 92 16,152
Funding Loss 2,992
Government Regulation 2,446
Legal Trouble 1,340
Order Cancellation/Reduction 1,335
Rising Costs 300
Reorganization/Consolidation 158
Technological Update 151
Flooding 150
TOTAL 66,414 312,220
 
CHALLENGER, GRAY & CHRISTMAS, INC.
JOB-CUT ANNOUNCEMENT REPORT
QUARTER-BY-QUARTER
          Q1             Q2         Q3          Q4       TOTAL
1989 9,850      10,100  24,085    67,250   111,285
1990 107,052  87,686  49,104    72,205   316,047
1991 110,056  76,622  147,507  221,107  555,292
1992*110,815  85,486 151,849 151,850  500,000
1993 170,615  84,263 194,486  165,822  615,186
1994 192,572 107,421 117,706   98,370    516,069
1995 97,716   114,583  89,718   137,865  439,882
1996 168,695 101,818  91,784   114,850  477,147
1997 134,257 51,309    95,930   152,854  434,350
1998 139,140 131,303  161,013 246,339  677,795
1999 210,521 173,027 173,181  118,403  675,132
2000 141,853 81,568   168,875  221,664  613,960
2001 406,806 370,556 594,326 585,188 1,956,876
2002 478,905 292,393 269,090 426,435 1,466,823
2003 355,795 274,737 241,548 364,346 1,236,426
2004 262,840 209,895 251,585 315,415 1,039,735
2005 287,134 251,140 245,378 288,402 1,072,054
2006 255,878 180,580 202,771 200,593 839,822
2007 195,986 197,513 194,095 180,670 768,264
2008 200,656 275,292 287,142 460,903 1,223,993
2009 578,510 318,165 240,233 151,122 1,288,030
2010 181,183 116,494 113,595 118,701 529,973
2011 130,749 115,057 245,806
AVG   214,243 163,205 190,067 229,527
*Estimate based on half-year total. Challenger began tracking job-cut data in 1993. Before that, it was tabulated by an independent newsletter no longer published.

Copyright 2011 Challenger, Gray & Christmas, Inc. 
CHALLENGER, GRAY & CHRISTMAS, INC.
JOB-CUT ANNOUNCEMENT REPORT
ANNOUNCED HIRING PLANS
Industry Jobs
Retail 2,054
Computer 1,801
Services 1,401
Automotive 1,374
Health Care/Products 940
Energy 816
Electronics 502
Industrial Goods 373
Media 325
Insurance 200
Transportation 200
Financial 190
Government/Non-Profit 164
Telecommunications 140
Apparel 100
Consumer Products 67
Food 37
Education 22
TOTAL 10,706

Copyright 2011 Challenger, Gray & Christmas, Inc.  
CHALLENGER, GRAY & CHRISTMAS, INC.
JOB-CUT ANNOUNCEMENT REPORT
ANNOUNCED HIRING PLANS
MONTHLY TOTALS
2011 2010
January 29,492 31,381
February 72,581 8,300
March 10,869 13,994
April 59,648 15,654
May 10,248 14,922
June 15,498 11,732
July 10,706 8,151
August 14,075
September 123,076
October 124,766
November 26,012
December 10,575
TOTAL 209,042 402,638
Copyright 2011 Challenger, Gray & Christmas, Inc.

Suggested Articles

NASH leaders weigh in on the need for a drug for the disease and the challenges in getting it to patients.

The $210 million fund began life by leading a $17 million series A round in Quellis Biosciences.

The nine-story building will house Amgen’s Bay Area employees when it opens early in 2022.