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A plague of job cuts
January 29, 2001: 1:00 p.m. ET

Sluggish economy has tens of thousands of U.S. workers pounding pavement
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NEW YORK (CNNfn) - With Monday's announcement of 26,000 job cuts, DaimlerChrysler AG employees joined the rapidly swelling ranks of U.S. workers who have fallen victim to company cost-cutting in a weakening economy.

U.S. companies have announced tens of thousands of job cuts -- either through layoffs or attrition -- in just the past week, and the bloodletting has been across a broad spectrum of industries, from dot.coms to automakers.

graphicDaimlerChrysler (DCX: Research, Estimates) said Monday it would cut 19,000 hourly positions and 6,800 salaried employees from its Chrysler unit over the next three years, citing the high cost of launching new vehicles and a competitive U.S. market.

The company said it expects most of the cuts to be accomplished through retirement programs.

Embattled copier maker Xerox Corp. (XRX: Research, Estimates) said Monday it would intensify its efforts to reach profitability and planned to add 800 to the 5,200 job cuts it announced last fall; 4,000 of those cuts will come in the first quarter of 2001.

Friday's job cuts

Telecommunications provider WorldCom Inc. (WCOM: Research, Estimates) was reported Friday to be planning to lay off up to 15 percent of its 77,000 employees -- as many as 11,550 jobs -- in an effort to cut costs.

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graphicCNNfn's Peter Viles reports on mounting layoffs.
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Computer maker Hewlett-Packard Co. (HWP: Research, Estimates), shortly after warning that a weak economy would cause it to miss fourth-quarter earnings estimates, said Friday it would cut more than 1,700 jobs by mid-February.

Phil Condit, chief executive of aerospace firm Boeing Co. (BA: Research, Estimates) raised the possibility of a cost-cutting plant closure in an interview Friday with CNNfn, a move that could result in the loss of 8,000 jobs.

Sara Lee, Lucent and many more

Consumer-products conglomerate Sara Lee (SLE: Research, Estimates) said Thursday it planned to lay off 7,000 employees worldwide in an effort to focus on more profitable businesses after reporting a drop in profit as a result of the U.S. economic slowdown.

Telecommunications equipment maker Lucent Technologies (LU: Research, Estimates) said Wednesday it would cut 10,000 jobs.

And CNNfn parent company AOL Time Warner (AOL: Research, Estimates) said Wednesday it planned 2,000 job cuts, in addition to the 400 layoffs already announced at several CNN units.

All totaled, about 67,850 job cuts -- either immediately or in the future -- have been announced in just the past six days by major companies.

That doesn't include the 3,000 layoffs announced by personal-computer maker Gateway Inc. (GTW: Research, Estimates) or the 4,000 cuts announced by fiber-optic equipment maker Nortel Networks Corp. (NT: Research, Estimates) on Jan. 11.

That number also doesn't include the 12,828 job cuts made at Internet firms in January, according to outplacement firm Challenger, Gray and Christmas Inc.

A crueler month

At this rate, January promises to be a much grimmer month than December, in which 133,713 jobs were cut due to the U.S. economic slowdown, a jump of nearly 200 percent from the number of cuts in December 1999, according to Challenger, Gray and Christmas.

"Consumers watched the stock market fall, heating fuel prices rise, and to top it all off, employers launched a year-end job-cut spree," said John Challenger, chief executive officer of the firm that tracks unemployment figures.

Wayne Ayers, chief economist at Fleet Boston Financial Corp., said the speed of the economic slowdown has caused companies to be much quicker to lay off employees to protect the bottom line.

"This time around companies are not as slow to fire, partly because the speed of the slowdown is taking everybody, including Alan Greenspan by surprise," Ayers said.

Amid the turmoil, Americans' wages and benefits rose solidly in the fourth quarter of 2000, the government reported last Thursday, wrapping up a year that posted the biggest annual gain in compensation costs for employers since 1991.

Thus, job cuts -- while miserable for workers and the managers who must swing the axe -- are often a boon for investors, who like to see labor costs trimmed.

One possible downside to so many layoffs and cuts is that consumers will spend less, slowing the economy down even further. graphic