45,000 pay the price

Special report: global recession

Global slowdown: Job losses mount as US treasury chief shrugs off troubles

John Cassy Wednesday July 25, 2001 The Guardian

The global jobs market yesterday felt the full force of the economic slowdown when more than 35,000 redundancies were announced in a matter of hours. The cuts were led by the telecommunications equipment group, Lucent Technologies, which said it would cut up to 20,000 staff in addition to the 10,500 it has shed since January. It will take a $9bn (£6.3bn) charge as part of the process and scrap its dividend.

Nearly 45,000 jobs have been cut in the first two days of this week alone, following gloomy announcements from media group Reuters, European conglomerate ABB, engineering group Invensys yesterday and computer group Fujitsu on Monday.

The bloodletting shows little sign of coming to an end. Last night, Dutch electronics firm Philips was forced to deny claims from union representatives that it was ready to axe up to 25,000 of its workers. Philips has already said at least 10,000 people will go.

Analysts say that the lay-offs are a tacit admission that trading has become even tougher than when they first issued profits warnings, forcing them to take ever more draconian action.

The troubles at Lucent in particular underline how formerly powerful global entities are struggling to cope with sharp cuts in orders, revenues and profits.

The US's largest maker of phone equipment was a national champion less than two years ago. Yet, since December 1999, its shares have fallen by more than 90%, a takeover by French rival Alcatel has been abandoned and drastic efforts have been and are being made to right the business.

The latest job cuts mean a workforce that numbered more than 100,000 at the start of the year is likely to have been halved by the end of the year, when voluntary "retirements" and asset sales are also taken into account.

Yesterday Lucent reported a loss for the third quarter of $1.2bn - far worse than expected - and said it would take a charge of up to $9bn for restructuring costs.

Losses per share came in at 35 cents, compared with the 21 cents most analysts had been expecting, emphasising how the drop in orders had been sharper than even the most pessimistic had thought.

When it first started to address its problems earlier this year, Lucent promised that quarterly revenues would rise sequentially, but they have fallen. Revenues from continuing operations are now down 21% on last year's.

The remedial action comes in addition to an existing restructuring programme. "I am pleased with the progress we have made on all points of phase one of our restructuring programme. However, we intend to go deeper with a new phase to reshape Lucent for future growth and profitability even more quickly," said chief executive Henry Schacht. But market conditions were so unclear he was unable to give any guidance on when trading would start to improve.

The toll so far this week

Lucent 20,000

ABB 12,000

Invensys 2,500

Reuters 1,340

Fujitsu 9,000

http://www.guardian.co.uk/recession/story/0,7369,527059,00.html

-- Martin Thompson (mthom1927@aol.com), July 25, 2001

Answers

The situation from Iowa:

http://www.theiowachannel.com/news/887094/index.html

DHS Accused Of Hiding $20 Million Shortfall Agency Says Other Money Will Cover Shortfall DES MOINES, 1:56 p.m. CDT July 24, 2001 -- Members of a legislative oversight committee accused state human services officials of concealing a $20 million shortfall in the state's Medicaid program Tuesday. Members of the Legislative Fiscal Committee complained that the officials' delay in telling them about the shortage prevented them from deciding how to deal with it.

But officials with the Department of Human Services say a downturn in the economy has driven up the number of people eligible for the low- income health program, and it was only recently that they realized that.

Agency officials told the committee they were transferring $19.9 million from other service programs to cover the shortfall.

DHS financial expert Jan Clausen said that by May 8,200 more people than expected had been added to the program.

DHS Supervisor Cathy Anderson blamed the shortfall on a weak economy that has caused many Iowans to lose well-paying jobs that had benefits such as health insurance.

http://www.theiowachannel.com/news/887239/index.html

Budget Cuts Restricting DCI Agents Agents Were Pulled Off Case Rather Than Paid Overtime DES MOINES, 5:32 p.m. CDT July 24, 2001 -- State Division of Criminal Investigation officials say budget cuts are restricting their agents. How Are Budget Cuts Impacting The DCI? Special Agent Rick Benson says the division no longer can afford to pay agents overtime.

Benson called Coralville police Monday morning to ask that two agents working on the Donald Hebert case return to Cedar Rapids.

At the time, they were in the midst of the manhunt for Daniel Coop, who is accused of being associated with the killing of businessman Hebert.

The State Department of Public Safety has been forced to take steps to avoid cutting personnel. Officials are also trying to save $75,000 by having troopers and DCI agents clean their buildings.

http://www.theiowachannel.com/news/886713/index.htmlPanhandlers Fight Over Urbandale Corner Panhandling Is Illegal In Urbandale URBANDALE, Iowa, 10:47 a.m. CDT July 24, 2001 -- Urbandale police responded to a fight between two panhandlers who had both claimed a corner. According to a police report, 41-year-old Jerry William Doeckel Junior said it was a very lucrative corner and didn't like it when 46- year-old Donna Pitcher showed up on Sunday.

Doeckel told Pitcher the corner was his turf. But Pitcher, who is homeless, refused to leave and told Doeckel she was making between 200 and 300 dollars a day at the corner.

Police say the two got into an argument and Pitcher threw coffee at Doeckel before being knocked down by the man.

Urbandale Police Lieutenant Delbert King says both of them had dogs and even the dogs began fighting. Doeckel was charged with misdemeanor assault.

Panhandling is illegal in Urbandale, as well as in many other cities, but many get around the law by simply standing at a major intersection with a sign indicating they are poor.

http://www.theiowachannel.com/News/886917/index.htmlTwo Iowa Plants Announce Closings Wabash And International Paper Plants Closing DES MOINES, 12:14 p.m. CDT July 24, 2001 -- Semitrailer manufacturer Wabash National Corporation announced Tuesday morning that it will close its Fort Madison plant, leaving 335 workers out of a job. Company vice president and chief financial officer Mark Holden says the decision is part of a companywide review of all operations. Holden blames a downturn in the trailer industry.

Local economic development officials have been told the plant will be empty by September.

The Lafayette, Indiana-based company says it's the world's largest manufacturer of truck trailers. But Wabash has been hit hard by the slowing economy.

The company laid off 120 workers at the plant in November, 80 in March and 180 in April. Earlier this year a full shift was eliminated at the plant.

International Paper Closing In Clinton International Paper has announced it will close its Clinton plant, laying off 335 workers.

The company says the closure will be completed over 16 weeks. Company communications manager Kim Wirth blames the closure on a steady decrease in business.

Plant Manager Larry Smith says the company will hold negotiations on severance pay with employees in upcoming weeks.

The company has seen a decline in business since exiting the retail food packaging market, which eliminated 200 jobs. Company officials say the International Paper was also hurt by the recent loss of a major beverage carrier customer.

-- suzy (itssuzy02@aol.com), July 25, 2001.