ROCHESTER, N.Y. (AP) — In a week when Federal Reserve Chairman Alan Greenspan said he expected the U.S. economy to keep growing and Wall Street seemed generally pleased with corporate performance, workers at Eastman Kodak Co., Hewlett-Packard Co. and Kimberly-Clark Corp. were warned about thousands of new layoffs.
“You get immune to it after a while,” longtime Kodak technician John Hladis said with barely a shrug when the scythe fell once more at the Rochester-based photography company, slicing away another 10,000 employees.
But some economy watchers suddenly are concerned that this latest flurry of job cuts may foreshadow trouble ahead.
“We won’t know till afterwards, but I do think we may be seeing a tipping point in the economic cycle that these big layoffs are flagging,” said John A. Carpenter, chief executive of Challenger, Gray & Christmas, a Chicago-based employment research firm. “I think it’s a sign that leaks are breaking out.”
One thing is for certain: It was not a good week for American labor. In fact, it has been an unusually torrid summer in terms of trimming payrolls.
U.S. corporations announced plans in June to cut 110,996 jobs — the highest monthly total in 17 months — and July’s toll could turn out to be steeper. Overall job cuts are on the rise in 2005, reaching 538,274 through June, according to Challenger’s monthly job-cut analysis.
Suffering its third straight quarterly loss, Kodak upped its job-slashing target to 22,000 to 25,000 on Wednesday from an earlier range of 12,000 to 15,000. By mid-2007, its worldwide payroll should level out below 50,000, one-third what it was in 1988.
Even as the picture-taking pioneer enjoys rapid gains in digital photography, it is struggling to cope with plummeting demand for silver-halide film, its cash cow for the past century.
“We cannot keep bleeding year after year,” Kodak’s new chief executive, Antonio Perez, told analysts. “We need to establish an end point to this transformation, and we need to get there soon.”
The same applies at Hewlett-Packard. The Palo Alto, Calif., computer and printer maker moved Tuesday to modify its pension benefits and eliminate 14,500 jobs, or nearly 10 percent of its work force, in a scramble to rein in bloated costs and combat efficient rivals.
Kimberly-Clark joined the job terminators Friday: The maker of Kleenex tissues and Huggies diapers plans to let 6,000 people go and sell or close as many as 20 plants.
By contrast, the economic picture displayed plenty of positives last week.
The Labor Department said the number of Americans filing new claims for unemployment benefits plunged 34,000 to 303,000 — the largest one-week improvement since December 2002. Although Mr. Greenspan cautioned that a big run-up in already high energy prices could throw a wrench into his forecast, the Federal Reserve chairman repeated his bullish outlook.
“The economy,” Mr. Carpenter said, “has been very strong for the last year. We’ve seen over 2 million jobs created, we’ve seen unemployment drop to 5.0 percent, but I feel like we’ve probably hit the high-water mark.
“We are beginning to see some of these icon companies topple a bit. It’s not visible too much yet, but these are signs and suggest the next six months to a year are going to be tougher times for the economy.”
The overhauls at General Motors Corp., Kodak and other bellwethers are hardly surprising considering the heightened pressures of global competition, countered Pete Sperling, professor of finance at Yeshiva University’s Sy Syms School of Business in New York. The U.S. economy has become more dominated by service industries, he said.
“It’s something that’s basically long overdue,” Mr. Sperling said.