Walmart making cuts amid economic downturn

Revelations 18:23:’For the merchants were the great men of the earth; for by thy sorceries were all nations deceived.’

Important Takeaways:

  • Walmart cuts 200 corporate employees, says it will continue hiring in ‘key areas’
  • Walmart let go of almost 200 corporate employees on Wednesday amid the economic downturn and rising inflation, according to a person familiar with the development. The company said in a statement that these layoffs are a part of updating its structure.

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Parsley Energy lays off most workers as part of sale to Pioneer Natural Resources-government notice

(Reuters) – Parsley Energy will lay off most of its Austin, Texas workforce as part of its sale to Pioneer Natural Resources, according to a notice to the Texas Workforce Commission posted on Friday.

Pioneer Natural Resources is buying Parsley in a deal valued around $4.5 billion, part of a wave of consolidation among U.S. shale producers slammed by pandemic-driven collapse in oil demand.

The Parsley layoffs include 234 workers, though some of those employees will be offered jobs with Pioneer in Las Colinas, Texas or Midland, Texas, a letter to the state agency said. The layoff data is expected to be Feb. 8.

(Reporting by Jennifer Hiller; editing by Diane Craft)

MGM Resorts to lay off 18,000 furloughed U.S. employees

(Reuters) – Casino operator MGM Resorts International informed its staff on Friday it would lay off 18,000 furloughed employees in the United States as the coronavirus-induced travel curbs hurt its operations.

The company will start the process on Monday, according to a letter from Chief Executive Officer Bill Hornbuckle to employees and seen by Reuters. MGM employed nearly 52,000 full time and 18,000 part-time people in the United States as of Dec. 31.

“Federal law requires companies to provide a date of separation for furloughed employees who are not recalled within six months. Regrettably, August 31, marks (that) date,” Hornbuckle said in the letter.

Many companies have decided to cut jobs as the U.S. economy recorded its sharpest contraction in at least 73 years in the second quarter due to pandemic-led disruptions, with corporate profits sinking deeper.

MGM was forced to close all of its casinos and furlough about 62,000 of its workforce in the United States in March due to the lockdowns.

It brought back tens of thousands of employees when many of its casinos opened for business as the restrictions eased, but it still had to leave out 18,000 of them.

Hornbuckle said that employees who will be laid off will remain in the company’s recall list and if hired back by the end of 2021, they shall retain their seniority and benefits.

Earlier in the day, Coca-Cola said it would cut thousands of jobs as sales had slumped, while United Airlines confirmed it was preparing for the biggest pilot furloughs and will need to remove 2,850 pilots this year.

(Reporting by Ankit Ajmera and Sanjana Shivdas in Bengaluru; Editing by Sherry Jacob-Phillips and Arun Koyyur)

U.S. companies criticized for cutting jobs rather than investor payouts

By Alwyn Scott, Ross Kerber, Jessica DiNapoli and Rebecca Spalding

NEW YORK/BOSTON (Reuters) – U.S. companies laying off workers in response to the coronavirus pandemic but still paying dividends and buying back shares are drawing criticism from labor unions, pension fund advisers, lawmakers and corporate governance experts.

While most U.S. companies are scaling back payouts after a decade in which the amount of money paid to investors through buybacks and dividends more than tripled, some are maintaining their policies despite the economic pain.

Royal Caribbean Cruises Ltd <RCL.N>, Halliburton Co <HAL.N>, General Motors Co <GM.N> and McDonald’s Corp <MCD.N> have all laid off staff, cut their hours, or slashed salaries while maintaining payouts, according to a Reuters review of regulatory filings, company announcements and company officials.

“This is the time for large companies to try to help, for systemic reasons, to keep things flowing,” said Ken Bertsch, executive director of the Council of Institutional Investors. The council’s members include public pension funds and endowments that manage assets worth about $4 trillion.

Royal Caribbean, which has halted its cruises in response to the pandemic and borrowed to boost its liquidity to more than $3.6 billion, said it began laying off contract workers in mid-March, though the moves did not affect its full-time employees.

The company has not suspended its remaining $600 million share buyback program, which expires in May, or its dividend, which totaled $602 million last year and is set quarterly.

“We continue to take decisive actions to protect (our) financial and liquidity positions,” Royal Caribbean spokesman Jonathon Fishman said. He declined to comment specifically on the layoffs or shareholder payouts.

While Royal Caribbean’s rival Carnival Corp <CCL.N> has also laid off contract workers, it has suspended dividends and buybacks as it raised more than $6 billion in capital markets to weather the coronavirus storm.

UNEMPLOYMENT SURGE

Goldman Sachs analysts forecast this week that S&P 500 companies would cut dividends in 2020 by an average of 50% because of the fallout from the coronavirus pandemic.

For a graphic on S&P 500 shareholder payouts from 2009 to 2018, please click on: https://reut.rs/349G2JV

While there has been criticism of companies maintaining investor payouts, only those receiving financial support from the U.S. government under a $2.3 trillion stimulus package are obliged to suspend share buybacks.

Layoffs contributed to U.S. unemployment skyrocketing last month. Jobless claims topped 6.6 million in the week ended March 28 – double the record set the prior week and far above the previous record of 695,000 set in 1982.

Companies say job cuts are necessary to offset a plunge in revenue but their critics say they should consider turning off the spigots to shareholders before letting employees go.

“If companies are paying dividends and doing buybacks, they do not have to lay off workers,” said William Lazonick, a corporate governance expert at the University of Massachusetts.

Workers at franchised McDonald’s restaurants say they are getting fewer shifts since dining areas were closed in March, leaving only carry-out and drive-through services open.

Alma Ceballos, 31, who has worked at a franchised McDonald’s near San Francisco for 14 years, said she could not pay her rent after her schedule was cut to 16 hours from 40 and her husband, a janitor at Apple Inc’s <AAPL.O> Cupertino, California, campus was laid off.

McDonald’s, which has suspended buybacks but maintained its annual dividend, worth $3.6 billion in 2019, told Reuters its staffing and opening hours were not related to “making a choice between employees and dividends”.

About 95% of its U.S. restaurants are run by franchisees who decide staffing. McDonald’s said it was offering rent deferrals and other help to keep franchises open and employing workers.

“McDonald’s could commit to 30 days of income for all workers,” Mary Kay Henry, president of the labor union SEIU which has 2 million members, said in an interview with Reuters. “Corporations need to pay their fair share here.”

‘IT’S JUST WRONG’

General Motors has halted normal production in North America and temporarily reduced cash pay for salaried workers by 20%. It paid its first-quarter dividend on March 20 and has a month before declaring its next dividend, a spokeswoman said, adding that GM would assess economic conditions before deciding.

“Our focus in the near term is to protect the health of our employees and customers, ensure we have ample liquidity for a very wide range of scenarios, and implement austerity measures to preserve cash,” spokeswoman Lauren Langille said.

Oilfield services firm Halliburton furloughed about 3,500 workers in its Houston office starting on March 23, according to a letter sent to the Texas Workforce Commission obtained by Reuters. It has also cut 350 positions in Oklahoma.

Halliburton cited disruption from the coronavirus as well as plunging oil prices as the reason for the furlough. In March, it paid its first-quarter dividend to shareholders as planned.

A Halliburton spokeswoman declined to comment on the furlough and the company’s dividend policy.

Some of the companies laying off workers while still paying out shareholders, such as General Motors, signed an initiative last year from the Business Roundtable, a group of chief executives, pledging to make business decisions in the interest of employees and other stakeholders, not just shareholders.

Large asset managers such as BlackRock and Vanguard have cited managing “human capital” as a priority for companies in which they invest. Yet they have been reluctant to publicly press companies to avoid layoffs during the crisis.

Vanguard told Reuters it “recognizes the need for companies to exercise judgment and flexibility as they balance short- and long-term business considerations”.

BlackRock did not respond with a statement when contacted for comment.

“Profits should be shared with the workers who actually create them,” U.S. Senator Tammy Baldwin, a long-standing critic of share buybacks, told Reuters in an email.

“It’s just wrong for big corporations to reward the wealthy or top executives with more stock buybacks, while closing facilities and laying off workers.”

(Reporting by Alwyn Scott, Jessica DiNapoli and Rebecca Spalding in New York and Ross Kerber in Boston; Additional reporting by Hilary Russ in New York; Editing by Greg Roumeliotis and David Clarke)

Caterpillar shuts plant in Aurora, Illinois, that employs 800

A Caterpillar corporate logo is pictured on a building in Peoria, Illinois, U.S. March 19, 2017. REUTERS/Carlo Allegri

By Gayathree Ganesan and Akankshita Mukhopadhyay

(Reuters) – Caterpillar Inc <CAT.N> said on Friday it will shut its Aurora, Illinois, plant, costing about 800 employees their jobs as the world’s largest construction and mining equipment maker shifts production to other U.S. facilities.

Caterpillar was among companies that met with President Donald Trump in February to talk about job creation, at a time when about 2,300 U.S. workers at five major manufacturing companies stand to lose their jobs within the next two years as a result of offshoring.

The company said it will transition its large wheel loaders and compactors to its plant in Decatur, Illinois, and medium wheel loaders to North Little Rock, Arkansas.

“Out of about 800 production positions, about 500 positions would likely be added to Decatur and about 150 positions would be added in North Little Rock,” Caterpillar spokeswoman Lisa Miller told Reuters.

The company has already slashed its workforce by more than 16,000 to cope with a slumping economy and had said it would take another $500 million in restructuring costs in 2017.

Caterpillar said, in January, that it was considering closing two major production facilities, including the one in Aurora, Illinois, where it makes large-wheel loaders and compactors.

The plant closure is expected to be completed by the end of 2018, Caterpillar said in a statement.

The company in January forecast 2017 profit sharply below analysts’ estimates, hurt by sluggish demand in the construction and energy industries.

Caterpillar had about 95,400 full-time employees of whom 54,500 persons were located outside the United States as of Dec. 31, according to a regulatory filing.

(Reporting by Gayathree Ganesan and Akankshita Mukhopadhyay in Bengaluru; Editing by Lisa Shumaker)

Cisco to lay off about 14,000 employees: tech news site CRN

person walking past Cisco logo

(Reuters) – Cisco Systems Inc is laying off about 14,000 employees, representing nearly 20 percent of the network equipment maker’s global workforce, technology news site CRN reported, citing sources close to the company.

Cisco, which is due to report fourth-quarter results later on Wednesday, is expected to announce the cuts within the next few weeks, the report said. (http://bit.ly/2bEQfa3)

“We think it’s true,” Jefferies analysts wrote in a client note, referring to the report.

“As we’ve met with investors in recent weeks, we’ve picked up on concerns that Cisco may be looking to reduce headcount in the not-too-distant future.”

If confirmed, it would be the second big tech industry layoff of a similar scale announced this year. Intel Corp said in April that it would slash up to 12,000 jobs globally, or 11 percent of its workforce.

San Jose-based Cisco is facing sluggish spending by telecom carriers and enterprises on network switches and routers, its main business. In response, the company has been beefing up its wireless security and datacenter businesses.

These rumored cuts, if they turn out to be true, would be a bit of a catch-up the company is doing as it moves away from hardware, Needham & Co analyst Alex Henderson said.

“I do not think that they are going to be done after this,” Henderson said.

The company has already offered many early retirement packages to employees, the CRN report said.

Cisco, which had more than 70,000 employees as of April 30, declined to comment.

The company’s shares were down 1.4 percent at $30.71 on Wednesday on the Nasdaq.

Jefferies raised its price target on the stock to $35 from $30.72 and maintained its “buy” rating.

Up to Tuesday’s close, Cisco’s stock had risen about 15 percent this year, compared with a 10.5 percent increase in the Dow Jones U.S. Technology Hardware & Equipment index.

(Reporting by Ankit Ajmera, Bhanu Pratap and Supantha Mukherjee and Rishika Sadam in Bengaluru; Editing by Sandra Maler, Sunil Nair and Anil D’Silva)