Company Layoffs Snowball as Recovery Appears Elusive
May 09 2020 - 12:42PM
Dow Jones News
By Micah Maidenberg
Corporate America unveiled another wave of job cuts and warned
of additional reductions, as executives signal they are resigned to
a lengthy coronavirus-induced economic downturn.
This past week, General Electric Co., Uber Technologies Inc. and
Airbnb Inc. said they would lay off thousands of workers. MGM
Resorts International warned that some of the 63,000 employees it
has furloughed may be let go permanently starting in August.
Aerospace supplier Raytheon Technologies Corp., job-listings site
Glassdoor and United Airlines Holdings Inc. also said in the past
week that they had reduced jobs or planned to do so.
"Our airline -- and our entire workforce -- will have to be
smaller than it is today," Kate Gebo, United's executive vice
president of human resources, wrote in a recent memo to employees
about the company's plans to potentially trim at least 30% of
managers and administrative staffers starting in October. Other
carriers are expected to reduce staff as demand for air travel
remains historically low.
The burst of job-cut announcements two months after officials
moved to shut the economy to halt the spread of the coronavirus
indicates many companies are bearing down for a sustained slowdown
as the economy searches for traction. Some are also using the
moment to accelerate strategic shifts. In April, payrolls fell by a
record 20.5 million, erasing a decade of job gains.
"Based on the current situation, we now believe that some of our
colleagues may not return to work this year," MGM Resorts acting
Chief Executive Bill Hornbuckle said in a Tuesday memo to
employees. The casino company had hoped a significant part of
operations would have bounced back by the summer, he said.
Covid-19 hit some of General Electric's strongest businesses
hard, Chief Executive Larry Culp said on a call late last month
about results for January through March. Orders in the aviation
business, which makes engines for Boeing Co. and Airbus SE, fell
14%. The company on Monday said it was cutting roughly 13,000 jobs
in its jet-engine business.
"We're facing significant headwinds in aviation, and we may be
for a while. We wish it were otherwise, but that's not our
reality," Mr. Culp said.
Other aerospace companies are also feeling the impact. Raytheon,
which makes everything from jet engines to missile systems, is
planning $2 billion in expense cuts.
"We're furloughing folks both at the corporate office and across
the commercial businesses. Also, we furloughed people [at] the
factories, and I expect there will be further reductions," Raytheon
Chief Executive Greg Hayes said Thursday.
"Employers as a whole have dramatically reduced their
recruiting, and it is not clear when this will recover," said
Christian Sutherland-Wong, chief executive of job-listings and
company-ratings site Glassdoor in a staff memo Thursday. The San
Francisco-based company said Glassdoor would lay off 30% of its
workforce, or 300 people, including many who sell ads to smaller
businesses.
Mohawk Industries Inc., a manufacturer of rugs and other
flooring products, also is carrying out layoffs and furloughs as it
deals with an abrupt decline in demand, executives said Tuesday.
"The coronavirus has dramatically changed our short-term strategies
as we adapt to the rapidly evolving conditions," Chief Executive
Jeffrey Lorberbaum said.
Other executives are cutting jobs as they speed up restructuring
initiatives started before the pandemic. Nordstrom Inc. said
Tuesday it would permanently close 16 stores to help better focus
on meeting customer expectations for digital shopping. Covid-19 is
heightening the importance of such efforts, Chief Executive Erik
Nordstrom said.
Mattel Inc. said in a filing that the Covid-19 crisis
accelerated existing cost-cutting plans and disclosed it would let
4% of corporate staff go.
On Thursday, Cox Automotive said it would furlough roughly
10,000 workers in the U.S., most of whom work at Manheim, the
company's wholesale-vehicle auction business. The Manheim unit had
been transitioning toward digital operations, but Covid-19 pushed
the company to speed the shift from in-person to online auctions,
given the latter offers a safer experience for clients, according
to Cox.
Uber finance chief Nelson Chai told investors Thursday that the
ride-hailing firm, which is laying off more than 3,700 workers,
doesn't think it will bring as many people back over time.
"I don't think you'll see us adding back at that same level,"
Mr. Chai said. "As you know, the company's been very much focused
on efficiency."
Write to Micah Maidenberg at micah.maidenberg@wsj.com
(END) Dow Jones Newswires
May 09, 2020 12:27 ET (16:27 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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