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Thursday, January 22, 2015

Job Watch: 2015 Will Be A Year Of Cutbacks -- January 22, 2015; The 800-Pound Gorilla Has Arrived

Updates

January 27, 2015: Just last week I said that 2015 "will be the year of [job] cutbacks." Today this headline: IBM plans biggest corporate lay-off in history and Forbes has the story.
 
Original Post

It looks more and more like 2015 is going to be the year of job losses. I have not been able to keep up with all the job losses that are being announced during earnings (4Q14) season.

From DCClothesline: storm on the horizon: massive layoffs planned for corporate conflomerates in 2015; January 2, 2015  --
It appears that the confidence in the economy may be another over-inflated attempt at masking the true state of affairs. In fact, some of the largest U.S. corporate conglomerates are planning for massive layoffs in the coming year.
CEO of the Coca-Cola company, Muhtar Kent dubbed 2015 as a transition year and notes that 2015 will most notably be “the most important year for us to make the changes in terms of a leaner, better-operating model.” He adds, “The consumer is challenged everywhere around the world,” Kent said in a conference call. “There is a lot of volatility in the world, in currencies, in interest rates, in growth rates and in geopolitical issues.”
The list seems extraordinary. There are two themes here:
  • it's not just the oil and gas industry; it's across the board, all sectors
  • these are high-paying jobs, with companies that generally provide health care and many other benefits for their employees; these are not minimum wage jobs being shed
It's not just the oil and gas industry. It's everywhere. Today eBay and AmEx announced significant cuts.

Some recent headlines:
Sound bites:
  • For Coca-Cola and McDonald's, 2015 will be a year of cutbacks, change and evolution as an increasingly Internet-savvy and health-conscious public continues to move away from sugary drinks and fried and processed foods.
  • Carolinas HealthCare System has eliminated more than 100 management positions – including two jobs that paid a total of about $3 million – as part of a goal to trim $110 million in expenses from next year’s budget, hospital officials announced Tuesday.
    Cutbacks are necessary, in part, because of federal and state budget cuts in Medicare and Medicaid reimbursement for seniors, low-income and disabled patients, CEO Michael Tarwater said. That includes refusal by North Carolina and South Carolina lawmakers to expand Medicaid eligibility under the Affordable Care Act.
  • Catholic Health Initiatives is one of the largest medical systems in the country. The national system has asked its regional networks “to reduce expenses as a result of external and internal factors, which have adversely impacted our overall financial performance,” Robertson wrote.  
2015 is the first year in which the full effect of ObamaCare will start to be felt after most components of the act were deferred or waived until 2015/2016.

See disclaimer.

For investors, four big stories that all herald good news --
  • GOP holds both houses of Congress; the President is a lame duck
  • EU is going to stimulate the European economy to the tune of $1 trillion (in Euros, of course)
  • job cuts (blame it on ObamaCare or not), the gain drops immediately to the bottom line
  • huge savings on transportation costs for all sectors (and, no, the airlines and the taxis aren't going to eliminate their fuel surcharges without mandates)
The market is up for 200 points today. Just saying. 

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