Wednesday, February 7 2:51 AM SGT

January's Job Cuts Set Eight-Year Record - Survey

NEW YORK, NEW YORK, U.S.A., 2001 FEB 6 (NB) -- By Kevin Featherly, Newsbytes.

The "R" word now is being spoken openly; the economy is in recession. Or so says an outsourcing-placement firm president whose company tracks job layoffs nationwide.

That company, Challenger, Gray & Christmas, today released numbers indicating that job cuts hit an eight-year record of 142,208 during the month of January. That surpassed by 8,000 firings the previous record for a month during that period - 133,713 layoffs - reached just last month.

The record year for job cuts in the 1990s was 1998, a year still viewed as a boom time for the US economy despite its 677,795 lost jobs. But there is a difference in the kind of job cuts happening now as compared to 1998, when layoffs did not cripple the economy, said John Challenger, CEO and president of Challenger, Gray & Christmas. The current picture, he said, is much more bleak.

"These are all recessionary type cuts," Challenger said. "From a job-cut perspective, we're already there." In 1998, Challenger said, even as the economy was chugging along, numerous jobs were shed from under-performing sectors of otherwise moneymaking companies.

"(Companies) were getting out of those areas where they weren't doing well and then trying to catch the wave of growth that was going on throughout the '90s, and reinvesting in those resources," he said. "You saw a lot of companies getting quickly out of areas of their business where they weren't seeing market share."

That has fundamentally changed in recent months, Challenger said. Job cuts cannot be attributed to under-performing sectors within companies, he said, but instead must be blamed on entire industries rocked by revenue shortfalls.

"Now we're seeing companies doing poorly as whole industries, with reduced revenues going forward," he said. "You're seeing not just the poor performers, you're seeing other companies within the industry also cutting back because revenues are going down. These are more recessionary type cuts."

Layoffs in the past two months total 275,921, fully 41 percent of all the jobs lost during that record-setting year of 1998.

According to the Challenger firm's figures, the automotive industry was rocked hardest by January's job cuts, suffering 34,959 firings. But "new economy" high-tech industries took the next most painful wallop; the telecommunications, e-commerce and computer industry sectors combined for 44,851 lost jobs last month.

Those numbers break down this way:

- The telecom industry lost 22,060 jobs in January;

- E-commerce and other dot-coms lost 11,887 positions;

- Computer companies lost 10,904 jobs.

The Industry Standard online magazine also keeps tallies of dot-com layoffs. According to its "Layoff Tracker," updated Monday, there have been 53,071 layoffs among dot-coms between December 1999 and Feb. 5, 2001. Just Monday, the dot-com consulting firm Razorfish alone slashed 400 jobs from its rolls in a cost cutting move.

"The industrial economy has been hit very hard," Challenger noted. "But now, as we're moving into 2001, we're beginning to see the numbers for the new economy heat up, as those companies look at customers who are slashing their high-tech and equipment budgets. Many of these companies are now experiencing revenue shortfalls."

Challenger said, "That condition is causing them to slash their employment costs to try to keep their profitability at levels that the market will buy."

Challenger, Gray & Christmas' figures also were partially fortified by a separate survey today of California's high-tech Mecca, the Silicon Valley. According to the consulting Web site ValleyJobs.com, there were 2,100 layoffs among Silicon Valley and Bay Area dot-coms in January.

There have been some public figures, most notably outgoing President Bill Clinton, who have reassured that public that the downturn in the economy is a short-term blip on the economic screen. Others have accused new President George W. Bush of compounding fears by issuing warnings of further economic blight to justify his proposed program of substantial tax cuts for the wealthy.

But Challenger is among those who believe that the current downturn might be a real signal of worse times to come, especially considering some of the other factors that have recently come into play.

"The last severe recession in the 1970s was kicked off by energy," Challenger noted. "Now we have oil and gas prices going up, which attacks the old economy. And we have the electrical power crisis in California and the risk that it could roll out to other areas of the country, attacking the new economy."

Bottom line, Challenger indicated, we may not have seen the worst of what already are stagnating economic times. "I think that's certainly possible," he said.

Challenger, Gray & Christmas is online at http://www.challengergray.com/ , but most of the site is accessible only to clients.

The Industry Standard is on the Web at http://thestandard.com .

ValleyJobs.com can be located at http://www.valleyjobs.com .

-- Swissrose (cellier@azstarnet.com), February 07, 2001