The cruel earnings season for the American worker intensified Wednesday as more companies announced layoffs.
Merck said it will cut 12 percent of its workforce, or 6,800 of its employees, on top of 10,400 cuts in an earlier restructuring.
The staff reduction came on the same day the company said its third-quarter profit fell 28 percent, as it cut its long-range
earnings outlook due to disappointing sales for its medicines and a difficult economic climate.
That bad news came a day after Yahoo! said it would slash its staffing rolls by 10 percent, amounting to 1,500 of the Internet search giant's 15,000 full-time employees.
Many companies are turning in lackluster results for the latest quarter. And they are also warning about grim business prospects in the months ahead. Faced with declining profits and sagging revenues, they are scrambling to cut costs. And in many cases that means labor.
“Companies today need to react quickly to revenue decline," said John Challenger of employment specialist Challenger, Gray and Christmas. "They’ve got to ratchet down their workforce. The Street expects that. They have no choice.”
Caterpillar was a case in point Tuesday. After the equipment giant missed market expectations for quarterly profit by 2 cents, the CEO said the company had laid off an unspecified number of workers in the United States, England and France as it tries to adjust to what he called "recessionary conditions" in some of its markets. (Read story here)
Meanwhile, Merrill Lynch Chief Executive John Thain said over the weekend that he expects thousands of job cuts after the company is acquired by Bank of America , according to news reports.
These were just the latest in a growing layoff trend as fallout from the credit crunch and economic downturn continues to pelt the economic landscape.
Last week PepsiCo and Danaher said they would lay off thousands of workers, while the state of Massachusetts disclosed plans to cut its payroll by 1,000 as it faces a tax shortfall.
The situation is poised to worsen as the holidays approach as many businesses scrutinize budgets for the coming year. Christmas layoffs are common in tough times.
"It's a fairly grim outlook," said Michael Goodman, director of economic and public policy research at the Donahue Institute of the University of Massachusetts, told Reuters. "I don't know of any sector of the economy that will be spared."
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Ed Yardeni, chief investment strategist for Yardeni Research, is hoping that the U.S. government's $700 billion bailout package will slow the job cuts.
"If this rescue plan doesn't work, then...you could see something much worse that could feel like a recession or a depression, with all sorts of people losing jobs," he told Reuters.
A survey of more than 100 chief financial officers and other senior executives—conducted last week—found 56 percent expect to reduce payrolls over the coming year.
A majority polled by CFO Magazine also predicted falling revenues and plan to cut operating costs by at least 5 percent. (See a discussion about the survey here)
Workers are scared.
Some 47 percent polled last month by Workplace Options said news of the financial crisis made them fearful about job security, and 25 percent said they had begun scanning help-wanted ads or updating their resumes.
Workers in the financial sector, as well as those related to home building and at the Detroit automakers, have been hit by round after round of layoffs this year.
The failure of investment banks Lehman Brothers Holdings and Bear Stearns resulted in tens of thousands of people losing their jobs, but even banks that have survived the crisis, including Bank of America and Citigroup have cut head count dramatically.
General Motors said last week that it would close plants in Michigan, Wisconsin and Delaware and cut more than 4,000 jobs. That's already started to ripple.
U.S. auto supplier BorgWarner said last Friday it plans to cut up to 1,250 jobs in the United States—250 more than previously planned—in response to production cutbacks by carmakers it supplies.
Other recent layoff announcements include:
—Rockwell Automation said it would lay off about 3 percent of its staff, or 600 people.
That news came on Sept. 30, the last day of the U.S. manufacturer's fiscal year.
—Textron , the world's largest maker of corporate jets, said an unspecified number of jobs would be cut as it scales back its financial operation.
—Leggett & Platt , which makes bed springs and store shelving, said it was cutting back hours at some factories and, in the words of Chief Executive Dave Haffner, "must move to reduce staff. We are already doing so." It did not disclose the number of jobs it plans to eliminate.
Temporary employment also may prove harder to find.
Consumer electronics retailer Best Buy , which normally bulks up staffing in the holiday season, plans to cut seasonal hiring by as many as 10,000 workers this year.