Job Layoffs Cut Across Sectors as Growth Slows

Job cuts and layoffs are piling up like this season’s Midwest snow, further evidence that the end of an unprecedented stretch of economic growth may be heaving into sight.

The latest axes fell Monday at Aetna Inc., the Hartford, Conn.-based insurer, which said it will eliminate 5,000 jobs, and at shaving products and battery manufacturer Gillette Co. of Boston, which announced 2,700 job cuts. St. Louis-based chemicals maker Solutia Inc. also said it will cut up to 800 positions.

The downsizings come on the heels of thousands of other job eliminations and layoffs in recent weeks, and they extend beyond the smokestack industries that are generally the first to take a hit in a downturn. Cutbacks are hitting health care, services, financial firms--and of course the once-vaunted tech sector.

“I think it’s kind of ominous, and we’re going to have a pretty severe jolt in 2001, with layoffs and increasing unemployment,” said Ray Hilgert, professor of management and industrial relations at the Olin School of Business at Washington University in St. Louis.

“I’m hoping it won’t be too severe or long,” Hilgert said. “But . . . people forget that part of a marketplace economy is adjustments, and we’re long overdue for one.”

The labor market remains so tight that jobs still outnumber job seekers, and November unemployment figures showed that people laid off were able to find new jobs quickly. Retirements are at a record level, especially in the manufacturing sector, experts say, facilitating a gentler downsizing.

But the tide appears to be turning.

“We’re seeing less job creation, and . . . unemployment rising,” said David Andrea, an economist with CSM Worldwide, a forecasting firm in Farmington Hills, just outside Detroit. Among the recent unemployed, only about 14% remain jobless for more than 26 weeks, Andrea says. “We’ll start to see that creep up as it takes people longer to find new positions.”

In the last few weeks, job cuts and layoffs have become as commonplace as profit warnings, coming this month alone from “old-economy” firms such as General Motors Corp., DaimlerChrysler and Whirlpool Corp. and service sector giants Dun & Bradstreet Corp. and PacifiCare Health Systems Inc. Merger partners Chase Manhattan Corp. and J.P. Morgan have also announced job cuts or layoffs.

“This December has started off with a bang. We’ve seen a spate of heavy layoff numbers,” said John A. Challenger, chief executive of Challenger, Gray & Christmas Inc., a Chicago-based outplacement firm that has tracked layoff announcements since 1993.

More than 480,000 layoffs have been announced through November this year, 53% of them since July, according to the Challenger report. The automotive sector was leading all others with 59,621 announced job cuts for the year through November, followed by retail with 56,623.

The last time autos appeared among the top five job-cutting industries was 1996; now, despite the likelihood of another record year of U.S. auto sales in 2000, all of the traditional Big Three auto makers plan to idle factories to clear out unsold inventory.

It doesn’t stop at temporary plant closings. GM announced last week that it will eliminate 5,000 white-collar jobs in the U.S. in addition to cutting several thousand contract and temporary positions. While that news was overshadowed by GM’s decision to do away with its 103-year-old Oldsmobile brand in the wake of feeble sales, Challenger says GM’s move was “a mega-cut and, coming at the end of the year, it does not bode well for the coming year. It suggests they are looking forward at 2001 and saying we have to lower our output potential.”

Rust Belt workers largely are being spared from widespread layoffs for now because auto makers and other manufacturers are taking steps such as eliminating overtime. Affected workers suffer some limits in income, though auto workers maintain 95% of their pay during downtime.

But their lighter paychecks and the psychological uncertainty that goes with them translate to lower consumption, so there is a ripple effect as consumers choose not to trade in the family clunker, or go for the big-screen projection TV.

Pressure from Wall Street on corporations to boost profits has also intensified, especially with the bust of so many “dot-com” firms originally believed to have high potential. Demands by Wall Street and influential investors have forced companies to make tough decisions sooner than they may have in previous years. DaimlerChrysler’s layoffs were followed by a warning Monday it would probably lose a whopping $1.25 billion in the fourth quarter.

“We’ve gone through a very unique period where it was almost like a free lunch--everything was going right that possibly could inside the U.S. in part because things abroad weren’t going perfectly,” said Diane Swonk, chief economist at Bank One Corp. in Chicago, referring to weak overseas currencies that kept imported products cheap for Americans.

“Now we’ve moved to a period of time where we’ve got to share some of the pie, and it’s left some corporations hungry,” Swonk said.

Challenger says he believes that many employers retained unneeded workers during the first half of the year because they feared that the historically tight job market would make it difficult to staff up again when they needed to increase capacity.

“It looked as though employers were saying, ‘We don’t want to be caught again with the same kind of difficulties we had last summer when we needed but didn’t have people to hire,’ ” he said.

That changed in July when a record 63,967 layoffs were announced.

There was a time when employers were reluctant to lay off workers around the holidays. But since 1995, December layoffs have been significant, led by 103,166 in 1998.

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Terril Yue Jones reported from Detroit and Lisa Girion from Los Angeles.