[Asia Economy New York=Special Correspondent Joselgina] The wave of corporate restructuring is spreading beyond big tech to all sectors. Amid ongoing concerns about a global economic slowdown, manufacturers famous for Post-it, 3M, Uber, chemical company Dow, and software firm SAP have also joined the ranks of layoffs.
The Wall Street Journal (WSJ) reported on the 26th (local time) that companies such as Dow and SAP have announced plans to cut thousands of jobs in preparation for an upcoming recession, indicating that layoffs are continuing in sectors beyond big tech.
Dow announced that due to the sharp rise in energy and raw material prices following the Russia-Ukraine war, it will reduce its workforce by a total of 2,000 employees to cut costs. This accounts for about 5% of its global workforce of 37,800 employees. Jim Fitterling, CEO of Dow, stated during the earnings announcement, "Economic conditions deteriorated in the second half of last year due to record inflation, interest rate hikes, COVID-19 lockdowns originating from China, and ongoing geopolitical tensions." He added, "We are optimizing our cost structure, including layoffs, prioritizing our business, and taking measures to monitor macroeconomic uncertainties and the challenging energy market, especially in Europe."
The wave of layoffs that began last year centered on big tech companies such as Meta Platforms is now spreading indiscriminately across sectors. The day before, 3M and Uber also announced layoffs of 2,500 and 150 employees, respectively. WSJ noted, "Unlike Microsoft (MS) and Google Alphabet, which previously decided on large-scale layoffs, these companies did not significantly expand their workforce during the pandemic," citing recession concerns as the background for the spread of restructuring. The outlet added, "Tightening belts has become the new priority for companies."
On the same day, U.S. toy manufacturer Hasbro also announced plans to cut 1,000 employees, accounting for 15% of its total workforce. This move follows the recent decision to put its TV and film division, Entertainment One, up for sale and represents an additional round of restructuring. Through this, Hasbro aims to reduce costs by $250 million to $300 million annually by the end of 2025.
SAP also revealed plans to cut up to 3,000 jobs in preparation for a recession. The company plans to focus more on its profitable cloud business and pursue the sale of its stake in Qualtrics, which it acquired in 2018. IBM also plans to reduce its workforce by up to 3,900 employees, about 1.5% of its total staff. Semiconductor equipment maker Lam Research announced it will cut 7% of its workforce.
However, despite the continuous stream of layoff announcements, indicators confirm that the U.S. labor market remains resilient. Last week’s initial jobless claims, released on the same day, fell by 6,000 to 186,000, the lowest level since April last year, and below Wall Street experts’ forecasts. However, continuing jobless claims, which count those receiving benefits for at least two weeks, rose by 20,000 to 1.69 million. Experts interpret this as possibly indicating that it is taking longer for people to find new jobs.
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