Companies in the US and Europe chopped more than 90,000 jobs yesterday in another bloody 12 hours for the global economy that also saw the Iceland Government collapse, General Motors close more factories, a big Dutch bank receive more help from its Government and America’s second biggest cardboard processor collapse with US$5.6 billion in debts.

Around 74,000 jobs were cut in the US, with the rest in Europe as this helpful table from the Financial Times reveals. 

With US first time jobless claims running at more than half a million a week for the past two months, there’s no let up in the flow of bad news for US workers, and increasingly employees in Europe and Japan.

But it was the toll of job losses that staggered observers: construction equipment giant Caterpillar axed 20,000 places worldwide to cope with plunging sales. Its big Japanese rival, Komatsu warned of a 15% drop in sales and a 42% plunge in profit in the year to March 31.

But in some rare good news from the battered US housing sector, the National Association of Realtors reported a 6.5% rise in the number of pre-owned houses sold in December. The US Conference Board said its index of leading economic indicators rose 0.3%: economists had expected a fall of the same size. However, the realtors’ report also had the now familiar bad news with the median national home price in the US down 15.3% in December from the same month in 2007, the largest fall on record.

But elsewhere, the news was overwhelmingly grim:

The financial crisis claimed Iceland’s Prime Minister Geir Haarde who announced the resignation of his government after months of protests over economic policies that brought the country close to bankruptcy. A coalition of Green and leftwing parties are expected to win the election, which could provoke tensions between the country, the banks and the IMF.

New York-based drug maker Pfizer announced it would acquire its rival Wyeth for US$68 billion (A$104 billion), and then announced it would chop the combined workforces of the two companies by 19,000, or 15% and its own global workforce by 10%, or 8,000 jobs. It’s halving its dividend to help finance the deal and investment banks will carve up US$207 million from the mega-merger.

A survey of Japanese car companies by found they could cut up to 25,000 jobs in the next two months as sales weaken further. Toyota announced more closed days for its domestic factories in Japan and could be looking at a 20% fall in output over this year.

Texas Instruments reported a big fall in 4th quarter profits, and plans to shed up to 3,400 jobs. And still in technology, an American union reckons IBM, which last week reported better-than-expected 4th quarter profits, is preparing to chop at least another 2500 jobs soon.

General Motors dropped an extra 2000 jobs at two US plants as it continues restructuring. US telecom operator Sprint Nextel said it would cut 8000 jobs, or 14% of its staff — and top US home improvement retailer Home Depot is culling 7000 employees across America.

The big Dutch financial services group ING has obtained more help from its Government to stay alive and is sacking thousands of people, as is the huge Philips lighting and technology group.

All up, ING and Philips are shedding around 13,000 people from their businesses worldwide to try and cut costs as sales and demand slump faster than expected.

Corus, the big Anglo-Dutch steelmaker, is cutting 3,500 jobs around the world, some 2,000 of them in Britain, due to a sharp fall in demand for steel. The company is Europe’s second-largest steelmaker now owned by the Indian company, Tata which is struggling to keep Jaguar Landrover alive in Britain.

Another major US company has collapsed: the Smufit-Stone Container Corp, a cardboard packaging giant and one of the world’s largest paper recyclers, has gone bust in the US with $US5.6 billion in debt it was unable to service amid a slumping economy and demand for its products.

The company, which is based in the US but was founded in Ireland, filed for Chapter 11 protection — besides the $US5.6 billion in debt the company had $US7.5 billion in assets. 24 subsidiaries or affiliates also sought protection. It had net sales of $US7.4 billion in 2007.

In Britain, two retail chains went bust overnight and their listed owner, Stylo, was suspended from trading. Barratts Shoes and PriceLess became the latest British chains to enter administration, putting the jobs of around 5,00 people at risk. The 400 stores in the two chains will remain open for now. They join fashion chains, Dolcis, Stead & Simpson and Faith which have all gone into administration. Woolworths has closed, at a loss of 30,000 jobs and the home improvement group, MFI has failed. The UK children’s retailer Adams has shut, while furniture retailer Land of Leather has failed.

British Airways warned overnight it would plunge deeply into the red in the year to the end of March and was currently looking at a loss of around 150 million pounds, 1 billion pounds less than the 875 million pound operating profit earned in 2007. How long before it steps up job cuts to limit the damage the plunging pound (against the euro and the US dollar) is having on its bottom line?

American Express saw a 72% plunge in 4th quarter operating earnings, a sure sign of the ongoing damage of the credit crunch.

The card giant said quarterly profit from continuing operations hit $US238 million, down from $US858 million in the same quarter of 2007.

Amex received a $US3.4 billion from the US Treasury’s bank bailout fund earlier this month as surging consumer defaults forced it to set aside more reserves and the market for bonds backed by credit-card debt froze. The company has chopped 7,000 jobs, frozen management salaries and cut other costs to try and save $US1.8 billion a year. Earnings fell 32% to $US2.8 billion on the year.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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