Hewlett Packard to Cut 30,000 Jobs: Labor Statistics Weaken

July 19th, 2012
in econ_news

Econintersect: In its recent technology sector report, global outplacement firm, Challenger, Gray & Christmas recently reported plans Hewlett Packard (NYSE:HPQ) has to layoff 30, 000 of its employees.  A combined total of 51, 529 job cuts across the technology realm was reported in the first half of 2012.  Computer, technology and telecommunications are a few categories listed under this sector.

This number is higher than the total technology layoff number for the entire year 2011 and a 260% increase from the same half year mark a year ago.  A combined total of 283, 091 layoffs across all sectors was announced in the first half of 2012. This represents only a 15% increase from the first half of 2011 which saw 245, 806 layoffs.  Note: Due to job layoffs sometimes listing under multiple categories, it makes it difficult to ascertain which sectors actually experienced layoffs.

Follow up:

According to Challenger, Gray & Christmas CEO John Challenger, speaking about the HP cuts:

"The firm announced the largest mass layoff so far this year, and joins a relatively short list of private-sector companies that have announced five-figure layoffs."

Below is the press release issued by Challenger, Gray & Christmas:


For Immediate Release
Technology Sector Job Cuts Surge 260%

HP CUTS PUSH DOWNSIZING TO 3-YEAR HIGH OF 51,529
CHICAGO, July 16, 2012
– Planned layoffs that will impact 30,000 workers at computer giant Hewlett-Packard helped push job cuts announced by technology-sector firms to their highest level in three years, according to a report on tech-sector downsizing released Monday by global outplacement firm Challenger, Gray & Christmas, Inc.

Technology firms, including those in computer, electronics, and telecommunications, combined to announce 51,529 job cuts in the first half of 2012, a 260 percent increase from the 14,308 cuts announced during the same period a year ago.  The midyear total is, in fact, 39 percent higher than the 2011 yearend total of 37,038.  It is the largest midyear total since 2009, when the sector announced 118,108 job cuts in the first six months of the year.  
The surge in tech-sector job cuts occurred amid an increase in overall job cuts.  However, the 283,091 job cuts announced across all industries in the first half of 2012 were up just 15 percent from the 245,806 total industry job cuts at the same point last year.

Due primarily to the large job-cut announcement by Hewlett-Packard, the computer industry led the way in first-half job cuts with 34,380.  That marks a substantial increase from a year ago, when computer firms announced just 3,178 job cuts from January through June.  The computer industry alone announced more than twice as many job cuts in the first half of 2012 than in all of 2011 (14,677).

The computer industry was not the only one to experience a surge in downsizing activity.  Job cuts announced by telecommunications firms jumped 92 percent from 6,813 in the first half of 2011 to 13,059 in 2012.  Meanwhile, job cuts within the electronics industry remained flat.
“Announced in March, the decision by Hewlett-Packard to shed 30,000 jobs from its payrolls this year was driven primarily by the firm’s loss of competitiveness across several of its business areas.  Many point to its inability to compete with Apple on the tablet front, while failing to keep up with IBM and Accenture on the consulting side,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

“As a result, the firm announced the largest mass layoff so far this year, and joins a relatively short list of private-sector companies that have announced five-figure layoffs since the recession ended in July 2009.  Last September, Bank of America also announced 30,000 cuts.  We have also seen large-scale job cuts from pharmaceutical firm Merck, Sam’s Club and Borders,” he added.
“We may see more job cuts from the computer sector in the months ahead.  While consumers and businesses are spending more on technology, the spending appears to favor a handful of companies.  Those that are struggling to keep up with the rapidly changing trends and consumer tastes are shuffling workers to new projects or laying them off, altogether.”

While job cuts increased in the first half of 2012, the technology sector is still considered to be on fairly stable footing.  The latest figures from industry research firm Gartner show that global spending on IT products and services is on track to increase by 3.0 percent this year.  That is up from an earlier estimate of 2.5 percent growth.

Unfortunately, increased sales do not appear to be resulting in increased hiring.  An analysis of job postings by online jobs aggregator Indeed.com found that information technology job postings nationwide declined 7.0 percent between June 2011 and June 2012.

This is not to say that there are no jobs in the field.  Industry analysts point to strong demand for workers in mobile app development, data warehouse analysts and user experience designers.  E-commerce and digital marketing firm Acquity Group estimates that top tech companies such as Apple, Google, Facebook and Microsoft are hiring aggressively and that there are actually significant shortages of qualified professionals in digital and technology industries.



Challenger, Gray  & Christmas CEO, John Challenger used the example of HP's inability to keep up with market trends, lack of a viable counterpart to Apple's iPad and its slipping grasp on the consulting side as some of the major reasons for Hewlett Packards cuts.

"Those that are struggling to keep up with the rapidly changing trends and consumer tastes are shuffling workers to new projects or laying them off altogether," Challenger said in a statement.

The Bureau of Labor Statistics organizes its findings in a set standard, yet the numbers can be difficult to decipher:

  • Software development is divided amoung several categories, 1) Professional, Scientific and Technical Services and 2) Information.
  • Workers labeled under the computer category can be found in 1) Information 2)Presumably various other sectors where computer software, development and services are involved and 3) Manufacturing. Although these numbers are most likely very small.

Challenger, Gray & Christmas seems to have access to additional information critical to its published findings. CEO John Challenger has a dismal outlook for the computer sector in the coming months.

“We may see more job cuts from the computer sector in the months ahead.  While consumers and businesses are spending more on technology, the spending appears to favor a handful of companies.  Those that are struggling to keep up with the rapidly changing trends and consumer tastes are shuffling workers to new projects or laying them off, altogether.”

The technology sector as a whole is reported to be on stable ground.

John Lounsbury

Jillian Friesen

 

Sources









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