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Deutsche Post to Cut 14,900 Jobs in US Retreat

Germany's Deutsche Post revealed plans for a fresh round of job cuts Monday at its troubled US subsidiary DHL in a bid to stem heavy losses. It is also feared layoffs will come at Post's German units.

German logistics giant Deutsche Post announced Monday it will cut 9,500 jobs from its DHL express mail service, marking a dramatic drawback from the firm's United States operations.

DHL is to close all its service centers and halt its loss-leading, US-only domestic shipping by land and air, the company said at its headquarters in Bonn on Monday.

AP

A DHL delivery truck is parked next to a hot dog stand in New York: Mass job cuts are expected at Deutsche Post's US subsidiary.

Deutsche Post blamed its decision on heavy losses in the face of fierce competition from established rivals such as FedEx and United Parcel Service in America. The US business is expected to rack up losses of €1.2 billion euros ($1.5 billion) this year, the company added.

The cuts come on top of 5,400 already announced in DHL's American business, bringing the total to 14,900.

But the company stressed the move did not mark a complete withdrawal from America.

DHL's international express network in the US will continue operating, with 3,000 to 4,000 employees. International shipping deliveries will also remain unaffected.

The US cuts are expected to reduce operating costs at the US Express unit from €4.2 billion ($5.4 billion) to less than 770 million euros ($1 billion dollars) annually.

The restructionng announced Monday is set to cost the company an additional €1.5 billion, bringing its total cost to €3 billion.

Shares of Deutsche Post were up 4.2 percent at €9.77 in Frankfurt trading.

Over the weekend and on Monday, international media, including Germany's Süddeutsche Zeitung and the American Wall Street Journal reported the company's restructuring effort could threaten as many as 33,000 jobs in the US, where Post has 13,000 employees and 20,000 contract workers.

sjr -- with wire reports

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Fidelity will eliminate 1,300 jobs

Fund giant plans to reduce staff 3% this month

By Ross Kerber, Globe Staff  |  November 7, 2008

Battered by the weakening economy and falling stock markets, Fidelity Investments yesterday confirmed it will begin the first of two rounds of job cuts, laying off about 1,300 people this month from the Boston mutual fund giant.

This month's layoffs will represent about 3 percent of Fidelity's total workforce of 44,400, spokeswoman Anne Crowley said. Fidelity employs about 11,500 people in Massachusetts, and Crowley said the layoffs would be "roughly proportional" across its US and global operations. If so, 3 percent of the Massachusetts workforce would be 345 positions. It also has about 5,400 employees in New Hampshire and about 2,400 employees in Rhode Island.

One focus of the cuts will be company managers, Fidelity president Rodger A. Lawson wrote in a memo to employees yesterday. He did not specify which departments would be targeted for the reductions.

Fidelity will follow with a second layoff in the first quarter of next year, Crowley said, with details of it still to be finalized.

Privately held Fidelity is just one of many financial firms whose performance has lagged lately, with several publicly traded investment managers recently announcing layoffs, including Janus Capital Group of Denver and Legg Mason Inc. of Baltimore.

Last week, Pennsylvania forecasting firm Moody's Economy.com predicted Massachusetts would lose 7,200 financial and insurance jobs alone through the end of 2009, or 4 percent of total employment in the sector.

In his memo, Lawson said "difficult times" in financial markets and the economy have "resulted in a significant negative effect" on Fidelity's revenue.

"Reluctantly, this has led me to conclude that many of the cost improvement plans which would have been phased in by our business units over the next three years need to be accelerated," Lawson wrote.

"At times like this it is critical to maintain the strong financial status of the company while also ensuring we continue to provide our clients with the best products and services available in the industry," he wrote.

With fewer managers, Lawson added, "this simplification of our organization also will help us address the speed-to-market concerns which have been a major focus for us all."

Crowley said the two rounds of layoffs would result in fewer than the 4,000 total job cuts that news reports last week indicated the company was considering. No fund managers or analysts would be affected by the cuts, she added.

One of the state's largest employers, Fidelity has been battered along with other financial firms by steep losses in the global financial markets. The reduction in total assets under management in turn reduces the amount they collect in management fees.

The recent developments are also an abrupt reversal for Fidelity, which reported a profit of $478 million on revenue of $3.8 billion for the first quarter of this year, according to Moody's Investors Service. That performance put the company on pace to exceed its 2007 performance.

Now, with markets down more than 30 percent, Eric Kobren, editor of a newsletter for Fidelity investors, estimated the company's revenue could be down by $1 billion or more this year.

Kobren also noted that investors have transferred about $250 million out of Fidelity stock funds and into its money-market funds, which generate less revenue for the firm.

James Lowell, who edits a rival newsletter for investors, also said he expects a sharp decline in Fidelity revenue, paced by the market's decline. "The market went from a peak last October to a spectacular trough this October," he said.

Fidelity's big operations in low-margin areas like retirement services could provide a bulwark against the losses related to investment activity, Lowell said. That may mean Fidelity is under less pressure than other asset managers of similar scale that are more dependent on income from financial markets.

Ross Kerber can be reached at kerber@globe.com.  

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New job cuts could worsen downturn

By CHRISTOPHER LEONARD ASSOCIATED PRESS

Nov. 8, 2008, 2:04AM

Steven Ridenhour knows how to build a car. But after the Chrysler plant where he worked for 15 years in suburban St. Louis shut down recently, Ridenhour has little else to show on his résumé.

With four kids, a wife and a mortgage, Ridenhour, 39, is scrambling to replace his $28-an-hour pay. He isn’t optimistic. He knows thousands of others are being thrown out of work every month, making his job hunt a worsening struggle.

“I don’t have any proof I have skills in any other area,” he said. “So I’m competing with a lot of other people, and there aren’t a lot of jobs around.”

Many workers are stuck in similar straits. Even before the financial crisis hit hard in late summer, companies had shed tens of thousands of jobs every month this year. Then the credit crisis aggravated the misery.

Many job seekers and employers had been awaiting the presidential election, hoping it would lend some certainty to the economy. But few expect Barack Obama’s victory to produce immediate gains.

The current wave of layoffs is unusual because it seems to be coming fairly early in the downturn, noted David Card, an economics professor at the University of California-Berkeley.

No one is sure why, Card said. One factor could be that companies now are more adept at monitoring inventory and projecting sales.

“Firms are more aware of how sales are going and cutting employees right away,” he said.

In October, PepsiCo. Inc. cut 3,300 jobs, Goldman Sachs Group Inc. 3,260, Xerox Corp. 3,000 and Time Inc. 600.

Chrysler announced it would cut 18,500 jobs and American Express 7,000, or about 10 percent of its worldwide work force. And Circuit City said it will cut about 17 percent of its domestic work force, or about 7,300 people.

Economists say the surge in layoffs is just starting, with some saying the unemployment rate could reach 8 percent or higher, which would be the highest since it hit 10.8 percent in December 1982.

The collapse of the housing and credit markets has led thousands of companies to rein in spending and lay off workers. The cuts have dealt a spiraling blow that threatens to produce more job losses: As families have lost income, they’ve cut back on spending and hurt companies that depend on their consumption.

“It’s like you’re down and getting a kick in the pants,” said Lawrence Mishel, president of the Economic Policy Institute think tank in Washington.

Job losses were already dragging down family incomes and spending, Mishel said. The latest cuts could delay any recovery by at least a year, he said.

Mishel expects the jobless rate to rise from the current 6.1 percent to 8 percent or more. Before the credit meltdown, he thought the rate would peak at about 7 percent.

Job losses tend to deliver an outsized blow to the economy, under a theory known as Okun’s Law. Each 1 percentage point rise in unemployment triggers a 2 percent to 3 percent drop in economic activity as gauged by the gross domestic product.

For laid off workers such as Ridenhour, it’s easy to see why. Even with his layoff benefits from Chrysler and state unemployment checks, Ridenhour’s income is down 20 percent to 25 percent. The Chrysler benefits last 48 weeks, he said. He and his wife are seeking ways to cut the family budget. Dining out was the first to go. Other nonessentials are next.

“It’ll be a pretty slim Christmas,” he said.

Ridenhour’s union sponsored a job fair at the Chrysler plant last month, and he heard from friends that local utility Ameren Corp. is hiring line workers. But he’s been drawn instead to the local Vatterot College, which specializes in trade-related degrees such as court reporting and culinary work. He decided to sign up for night classes, in hopes a degree can enhance his resume.

Ridenhour plans to take classes in building maintenance because he had done some landscaping work before joining Chrysler. Still, he thinks he’ll eventually earn only about half the $55,000- $60,000 he says he typically made building cars. Yet he sees little alternative.

“I’ve got mouths to feed,” he said. “Thinking about going to a four year college — those days are over. It’s not like I can pack up and go away to college for four years and get a good job making good money.”

For the unemployed, it’s getting harder to feel optimism. Job cuts have grown steadily each month this year, culminating with a net job loss of 159,000 in September.

When the government reports the October unemployment rate Friday, it will give the fullest glimpse of the job market since the global credit crisis roiled world economies and sent stock markets plunging.

If the rate eventually exceeds 8 percent, it would surpass the jobless rates for the most recent slowdowns. After the last recession, from March to November 2001, unemployment kept rising and didn’t peak until it hit 6.3 percent in June 2003. And after the recession of July 1990-March 1991, the jobless rate kept growing and peaked at 7.8 percent in June 1992.

The jobless rate still would be far below the highs reached during the Great Depression. Labor Department figures record the rate in 1933 as being 24.9 percent, though the government didn’t track unemployment in a way that can be compared directly to data kept since 1948.

Still, the rising layoffs so far this year have been spreading pain. Sheri Griffiths has seen the consequences as manager of a job recruitment office in Santa Barbara, Calif.

More job seekers have been calling the AppleOne Inc. employment agency, she said. It’s taking longer to find jobs, and workers are settling for those they would have spurned a year or two ago. In recent years, employers often had to dangle concessions to hire the best workers, she said.

Now, “employers have time to be picky,” Griffiths said. “They have time to screen the candidates. They can interview 10 candidates or 15 candidates and get away with it.”

Griffiths tells job seekers to be flexible, to consider pay that’s lower and commutes that are longer than they prefer.

AppleOne, with branches nationwide, is so concerned about layoffs that it launched a drive to urge employers not to panic and cut jobs heedlessly. On its Web site, it posted a calculator to estimate the long-term cost of laying off a worker.

“We’re doing our best to let people know ... that cutting people right now is not going to be a solution. It’s a Band-Aid,” said spokeswoman Christine Duque.

The job market tends to correct itself once the economy begins to recover. Newly confident companies begin hiring again, benefiting from a bigger pool of job seekers, said Daniel Mitchell, an economist at the Cato Institute in Washington, D.C. That makes workers something like an undervalued stock, and companies eventually snap up the bargains.

“Nobody likes to see resources go to waste,” Mitchell said. Still, as with the stock market, no one knows where the bottom is or when the downturn might start to reverse, he said.

But the accelerating job cuts mean it likely won’t be soon, said Mishel of the Economic Policy Institute.

“We’re going to be seeing job losses and rising unemployment over the next year, and it will probably be a number of years before we even get back to a 5 percent unemployment rate,” he said.

The nation's largest automaker said in a filing with the U.S. Securities and Exchange Commission on Monday that the layoffs are a result of declining sales.

GM announced a $2.5 billion third-quarter loss on Friday and said it may run out of cash before the end of 2008.

The 1,900 additional layoffs will come in the first quarter of next year at parts stamping, engine and transmission factories in North America as GM cuts expenses to deal with a worsening cash crisis.

Spokesman Tony Sapienza said the cuts are in addition to 3,600 factory layoffs announced on Friday, bringing the total announced in the past week to 5,500.

Sapienza would not say which plants would be affected by the new round of layoffs. GM has 26 powertrain and 22 stamping plants in North America.

The layoffs will be indefinite, he said, but there will be no plant closures.

GM also filed a notice with the state of Michigan saying it would lay off 650 factory workers and another 52 salaried employees at its Orion Township, Mich., assembly plant starting Jan. 23. Sapienza said those layoffs are part of the 3,600 announced Friday.

The Orion plant makes the Chevrolet Malibu and Pontiac G6 sedans, which Sapienza said are selling well but have fallen victim to the overall U.S. market decline.

QVC, based in the Philadelphia suburb of West Chester, says it laid off 160 workers on Wednesday as it begins a cost-cutting program.

Ultimately, QVC says about 900 jobs will be eliminated over the next 14 months. About 200 new jobs are to be added. The net reduction of about 700 jobs is 5.8 percent of QVC's U.S. work force.

QVC says the cost-cutting measures will lower its 2009 operating costs by $30 million to $40 million.

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The layoffs, effective immediately, include 500 employees in the United States and 177 in Canada, said John Armstrong, a company spokesman.

They affect workers at U.S. Steel's facilities in the Pittsburgh area; northwest Indiana; Fairfield, Ala.; Ecorse and River Rouge, Mich., and Granite City, Ill. In Canada, the company is laying off workers at its Hamilton and Erie plants.

Armstrong declined to provide details about the number of workers being laid off at each facility.

"We regret having to do this, but it's necessary in order to control costs and maintain our competitiveness in this difficult environment," he said.

The dramatic downturn in the economy has negatively affected U.S. Steel's overall business, Armstrong said, and the company has already cut production to stay in line with customer demand.

"Now we're forced to adjust our work force to match our production levels," he added. "When the jobs will come back is dependent on when we see customer demand strengthening."

Last month, U.S. Steel said its third-quarter profit more than tripled as higher prices led to record gains in its tubular and flat-rolled steel businesses. But it warned softening demand in North America and Europe would hurt results for the rest of the year.

The company said its production was reduced late in the third quarter to match declining order rates for its flat-rolled and European segments.

Some of the largest declines in orders for flat-rolled steel have come from the struggling U.S. auto industry and appliance makers.

Shares of U.S. Steel rose $2.07, or 7.6 percent, to $29.45 in afternoon trading.

U.S. Steel Corp.: http://www.uss.com/corp/index.asp

(RTTNews) - The University of Texas System on Wednesday announced that its Board of Regents unanimously approved the elimination of about 3800 full-time equivalent positions in The University of Texas Medical Branch at Galveston, or UTMB. The University attributed the job reduction to financial exigency that exists at UTMB, mainly due to the absence of immediately available operating funds from state and local sources or philanthropy.

At a scheduled quarterly meeting at The University of Texas at El Paso, the Board instructed the University of Texas System, or U. T. System, to work with UTMB President David Callender to implement the workforce reduction, including personnel actions discussed in the Executive Session.

The Board recognized that UTMB is diligently and effectively restoring and continuing the significant educational and research programs in a financially responsible manner.

However, following a detailed financial analysis, it was found that UTMB's current rate of expenditures, including the continuation of wages and benefits for faculty and staff who have not returned to work, exceeds revenues by almost $40 million per month. In the current situation, the financial resources and reserves of the Medical Branch would be wiped out in about three months, leaving the institution with no funds to continue to operate.

The U. T. System noted that it does not have resources available to cover the ongoing operating expenses and needs of UTMB. Also, the Board of Regents cannot use Permanent University Funds, Available University Funds, or monies to be provided by the Federal Emergency Management Agency to fund operating expenses, or the payment of wages and benefits at UTMB.

The U. T. System added that the Board directs that steps be taken to lessen the impact of the workforce reduction on affected faculty and staff. The various steps include priority hiring of qualified employees for available positions at other U. T. System institutions, assistance in placement of employees with other healthcare institutions and employers, and exploration of opportunities for retirement incentive packages.

The Board and the U. T. System also announced their commitment to a successful, financially viable and responsible future for UTMB and the advancement of its education, patient care, and research mission.

For comments and feedback: contact editorial@rttnews.com