- The Washington Times - Monday, January 26, 2009

UPDATED:

The recession bit deeper as well-known known national companies announced job cuts Monday that will put tens of thousands of more people out of work.

Caterpillar Inc. of Peoria, Ill., said it will eliminate 20,000 jobs, Sprint Nextel Corp. said it will cut 8,000 positions and Home Depot Inc., a store known to virtually every American with a house or apartment, announced that it will dismiss 7,000 people because it is closing about four dozen lesser-brand stores within two months.

Among them will be 2,000 people holding non-store jobs. The Atlanta-based Home Depot employs about 300,000 people.

Further, giant drug maker Pfizer, which is buying rival pharmaceutical company Wyeth for $68 billion, said it is dismissing 8,000 workers and troubled General Motors Corp. said it will cut 2,000 jobs at factories in Ohio and Michigan because of slow sales.

The announcements of more job losses to come, which were not unexpected, came only three business days after the Labor Department reported that the number of people applying for jobless claims for the first time jumped by 62,000 to 589,000 for the week ended Jan. 17, the highest level since November 1982.

The number of new claims was certain to increase.

About 2.6 million people were without jobs last year in an unemployment rate that has climbed to 7.2 percent. Economists expect the rate to get worse.

Caterpillar, the world’s biggest manufacturer of mining and construction equipment, said its fourth-quarter profit plunged 32 percent and that it expects to dismiss 20,000 workers “to deal with a very challenging global business environment.” It employs 112,000 people worldwide.

The company’s chairman and CEO, Jim Owens, said global economic conditions and key commodity prices “have continued to decline significantly” and that “financial markets remain under stress and our expectations for 2009 have deteriorated.

“Uncertainty around the depth and duration of this recession makes it very difficult to forecast sales and revenues. As a result, Caterpillar is rapidly executing strategic ‘trough’ plans and implementing actions which will remove about 20,000 workers from our business.”

Considered to be an economic bellwether, the Dow component said it earned $661 million, or $1.08 per share, during the final three months of 2008. Analysts had expected earnings of $1.31 a share, according to Thomson Reuters. The company earned $975 million, or $1.50 a share, during the same period a year earlier.

Sprint Nextel, based in Overland Park, Kan., said it will eliminate about 8,000 jobs, about 14 percent of its 56,000 employees, in the first three months of the year to save $1.2 billion. About 850 of the cuts are voluntary, it said.

“Labor reductions are always the most difficult action to take, but many companies are finding it necessary in this environment,” CEO Dan Hesse said in a statement.

The company still was deciding where to make the jobs cuts, but will try to avoid significant reductions in customer service, a spokesman said.

The Sprint announcement came a month after AT&T said it will cut 12,000 jobs, about 4 percent of its workforce.

Home Depot’s cutback plans included closing its 34 Expo Design Centers, five YardBIRDS, two Design Centers and HD Bath, which has seven sites devoted solely to sales of fixtures for remodeling bathrooms.

“Exiting our Expo business is a difficult decision, particularly given the hard work and dedication of our associates in that business and the support of our local customers,” the firm’s chairman and CEO, Frank Blake, said in a statement.

“At the same time, it is a necessary decision that will strengthen our core Home Depot business.”

A company statement said the Expo branch of the company “has not performed well financially and is not expected to anytime soon. Even during the recent housing boom, it was not a strong business.”

It said the company anticipates taking a total pre-tax charge because of these actions of about $532 million, about $390 million of which will be recognized in the fourth quarter and the remaining $142 million will be recognized in 2009 and beyond.


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