Signs Of The Apocalypse: Large Multinationals Layoff Over 60,000 In January

The large multinational companies were supposed to have done their layoffs during the first half of 2009, when the recession was at its worst. Those layoffs should have cut as close to the bone as possible because of the severity of the downturn. The workers who were left at these companies were probably more productive as managements tried to get more work out of fewer people.

Many analysts believe that  many companies have fired too many people and that an improved economy will cause firms to hire anew to handle increased workloads brought on by renewed demand for their for goods and services.

But, it has not worked out that way at many companies. Several large multinational corporations have laid off or announced layoffs over 60,000 workers this month.

Notably, the layoffs are not concentrated in one or two industries which means that the economic recovery is patchy and some sectors and big firms have not seen any improvement to their business prospects at all.

Verizon (NYSE:VZ) said it was cutting 13,000 people and Wal-Mart (NYSE:WMT) is firing 11,000. The two companies have almost no overlap at all in customer bases so there is no common problem between them other than a weak economic environment

Big pharma company AstraZeneca said it will cut 8,00o people. The firm fired almost 13,000 people in 2007. Patents on a number of AstraZeneca’s drugs will expire this year and it will be faced with competition from lower priced generics.  AstraZeneca is one of a number of multinationals that have made two or three sets of layoffs during the last two-and-half years.

Deutsche Boerse, the operator of the Frankfurt stock exchange, will cut 10% of its staff. Smithfield Foods fired 1,300 people. The two firms could not be in more different businesses, another sign that the recession still bedevils a large cross-section of industries.

The trend of layoffs at big companies is particularly troubling because it means that some of the largest firms in the world have looked at their 2010 prospects and do not like them. Earnings guidance from major public companies has been mixed so far. Obviously, some corporation do not think 2010 will be one bit better than 2009 was.

The layoffs are also unsettling because the federal government is in a losing struggle to stanch the growth of unemployment. The CBO recently said it expected unemployment to stay above 10% until the middle of the year. Using the government’s broadest measurement of joblessness, that figure is closer to 17%. Jobs available for each person looking for work are also at a historic low.

The employment picture so far this year may even be worse among small business. Most still have little or no access to credit and many rely on a few customers for all of their sales.

The notion that the employment picture is getting better is just that–a notion. That will not change until the largest companies stop firing and start hiring.

Douglas A. McIntyre