The Year of the Ox got off to an inauspicious start for American workers.
A slew of American heavyweight companies, including Caterpillar, Pfizer, Sprint Nextel, Home Depot and General Motors, announced cuts Monday adding up to 45,000 jobs lost. What's more, a group of business economists predicted many more job losses in the year ahead.
Caterpillar had by far the worst news of the group. The world's largest heavy equipment maker announced Monday it was slashing up to 5,000 jobs on top of several earlier actions. The latest cuts of support and management employees will be made globally by the end of March. An additional 2,500 workers already have accepted buyout offers, and ties have been severed with about 8,000 contract workers worldwide. In addition, about 4,000 full-time factory workers already have been let go.
In all, the almost 20,000 jobs being lost equal about 18 percent of the company's work force.
Ailing automaker General Motors Corp. also said it would slash 2,000 jobs at plants in Michigan and Ohio as the recession slams sales of its vehicles.
Sprint Nextel Corp. said it would be eliminating about 8,000 positions in the first quarter as it seeks to cut annual costs by $1.2 billion. Home Depot said it would reduce about two percent of its associates, or about 7,000 jobs. And Pfizer, fresh from agreeing to buy rival Wyeth for $68 billion, announced cost cuts that will include slashing about 8,000 jobs.
The Year of the Ox, year 4706 in the Chinese lunar calendar, is supposed to represent prosperity through perseverance and hard work. But the hope for a better year in 2009 was being dashed by the job losses and the growing concern that many more would join the ranks of the 2.6 million who became unemployed in 2008, the most annual job losses since 1945.
The latest outlook from forecasters in a survey released Monday by the National Association for Business Economics showed 39 percent predicted job reductions through attrition or “significant” layoffs over the next six months, up from 32 percent in the previous survey in October. Around 45 percent in the current survey anticipated no change in hiring plans, while roughly 17 percent thought hiring would increase.
President Barack Obama, referring to a litany of companies announcing job cuts in the past few days, said the nation can't afford "distractions" or "delays" when it comes to the economic stimulus plan working its way through Congress.
Obama pointed to job losses at companies including Microsoft, Intel, United Airlines and Home Depot. And he said it means more working men and women "whose families have been disrupted and whose dreams have been put on hold."
Obama told reporters Monday the government owes it to "every American" to act with a "sense of urgency" and "common purpose."
Senate committees are scheduled to take up the massive economic stimulus package Tuesday and the full House is expected to vote on its version of the $825 billion plan Wednesday. Republicans want the recovery package tilted more toward tax cuts.
Obama said these "extraordinary times" call for "swift and extraordinary action."
Last week, Microsoft Corp. said it planned to cut thousands of jobs because of the recession, adding conditions were so uncertain that it could not accurately forecast its earnings and revenue for the coming six months. (MSNBC.com is a Microsoft-NBC Universal joint venture.) And Intel Corp. said it plans to cut up to 6,000 manufacturing jobs. United Airlines parent UAL Corp. said it would get rid of 1,000 jobs, on top of 1,500 axed late last year.
The problem showed its global reach, too. Bank and insurer ING Group NV said Monday it will book a large fourth quarter loss, cut 7,000 jobs and change its CEO. And Dutch company Philips Electronics announced it would reduce its work force by 6,000 jobs.
But the bulk of the tens of thousands of cuts announced globally Monday came from the United States.
President Obama's remarks came soon after Caterpillar offered a gloomy outlook for 2009.
The Peoria, Ill., company said earnings slid as mining companies and other customers scaled back purchases amid slumping commodity prices, the credit freeze and tough market conditions. The results reflect the troubled state of the global economy as Caterpillar's products are used worldwide in a range of industries.
Caterpillar, an economic bellwether and component of the Dow Jones industrial average, earned $661 million, or $1.08 per share, during the three months ended Dec. 31. It earned $975 million, or $1.50 per share, in the same period a year earlier.
Revenue rose 6 percent to $12.92 billion.
Analysts, on average, expected Caterpillar to report earnings of $1.31 per share on revenue of $12.84 billion, according to a survey by Thomson Reuters. In recent weeks, analysts have forecast continued weak earnings for Caterpillar and other U.S.-based machinery firms, pointing to the weakening construction and mining markets and an infrastructure spending plan proposed by Obama that may not boost equipment demand anytime soon.
The company forecast sales and revenues of $40 billion, or $2.50 per share in 2009, down from $51.32 billion, or $5.66, last year. It said it had taken actions to remove about 20,000 workers, including Caterpillar employees, contract and agency workers.
Caterpillar, which employs more than 112,000 people worldwide, has expanded dramatically in recent years, driven by surging demand spurred by infrastructure projects in developing countries, particularly in Asia. But that demand has waned with the weakening global economy.
In response to the worsening conditions, the company also announced plans to slash executive compensation by up to 50 percent. It also instituted a global hiring freeze.
"Without a doubt, 2009 will be a very tough," Caterpillar Chief Executive Jim Owens said in a statement.
Investors hope Obama's infrastructure spending program will bolster demand for road-building and other equipment made by Caterpillar. But analysts warn the plan may have little near-term impact on equipment demand, and that proposed figures would be insufficient to help given steep declines in the U.S. construction market.
Meanwhile, Home Depot Inc. said it's cutting 7,000 jobs and closing its smaller Expo chain as the recession continues to batter the nation's housing market.
The nation's largest home improvement retailer said the cuts will affect about 2 percent of its work force.
Sprint Nextel Corp., the No. 3 U.S. mobile service provider, said it would eliminate up to 8,000 jobs, or about 14 percent of its workforce, under a plan to cut labor costs.
Dallas-based Texas Instruments Inc., which makes chips for cell phones and other gadgets, says it will cut 3,400 jobs, 1,800 jobs through layoffs and another 1,600 jobs through voluntary retirements and departures.