Through August, planned job cuts were slightly lower than they were during the first eight months of 2013. In all, companies have announced just under 333,000 planned layoffs so far this year, down 4% from roughly 347,000 layoffs announced between January and August of 2013.
According to data compiled by Challenger, Gray & Christmas, 10 companies alone have accounted for more than 20% of the announced job cuts, planning nearly 72,000 job cuts this year combined. No company announced more layoffs than Microsoft, with 18,000. Based on data from global outplacement firm Challenger, Gray & Christmas, 24/7 Wall St. reviewed the companies cutting the most jobs.
In some cases, companies face difficult obstacles to return to profitability, or are insolvent, and are forced to shed jobs. However, in an interview with 24/7 Wall St., Challenger, Gray & Christmas CEO John Challenger explained that this is not the case for most companies. “Generally, we’re not seeing layoffs that occur because companies are doing poorly, [or] they are near insolvency.”
In many cases, Challenger told 24/7 Wall St., layoffs are conducted as part of a company restructuring to become more lean. With the economy improving, he added, “more of the layoffs are occurring now because companies are shifting their business strategies, they’re buying other companies and they don’t need two headquarters.”
Technology companies have been the largest downsizers so far this year with several long time stalwarts leading the way. Microsoft (NASDAQ: MSFT), Hewlett-Packard (NYSE: HPQ), and Cisco Systems (NASDAQ: CSCO) announced the most job cuts, not only among tech companies, but also overall.
The industry with the second largest planned layoffs so far in 2014 has been retail, with nearly 30,000 job cuts announced through August. This figure is actually down from last year, despite layoffs at Best Buy (NYSE: BBY), as well as Coldwater Creek, which declared bankruptcy in April.
Financial companies, too, were among the top companies cutting jobs. Both JPMorgan Chase (NYSE: JPM) and Bank of America (NYSE: BAC) were among the 10 companies with the most planned layoffs so far in 2014.
One factor that often drives job cuts is industry evolution. According to Challenger, this is especially true in the retail sector, where “it’s an area of low margins and fierce competition and technology is making a big difference in how consumers are coming to stores.” As a result of such changes, he added, retailers are making cuts due to the changing retail landscape, especially the fact that more shopping is being done online.
Best Buy is probably the best example of this. With the increased popularity of online sales, the phenomenon of showrooming has undercut sales at the electronics retailer as many customers visited stores to try out a product before buying it online, oftentimes at Amazon.com (NASDAQ: AMZN). The online retailer has long been famous for its low prices and has even been willing to sacrifice profits to grow its market footprint.
Other companies cut jobs in an effort to continue to stay competitive. Shareholders invest in companies with the hope that shares will generate higher returns than they could elsewhere. In order to provide such returns, companies often restructure their operations to trim costs and increase profits, which can lead to layoffs. Layoffs at many of the employers cutting the most jobs are often motivated by such initiatives.
However, in some cases, companies that announced layoffs truly had no choice. For example, Coldwater Creek had to close all of its stores after filing for bankruptcy protection. Not only were shareholders wiped out in the bankruptcy, but the company had to close all of its stores in order to pay off its creditors, eliminating thousands of jobs in the process.
Many of the companies with the most layoffs are also among the largest employers in the United States. JPMorgan Chase announced an additional 5,500 planned layoffs earlier this year, on top of more than 19,000 job cuts announced in 2013. However, this total represents just a small share of JPMorgan Chase’s total headcount, which was more than 245,000 as of the second quarter of the current fiscal year.
Challenger Gray & Christmas provided 24/7 Wall St. with all job cut announcements affecting at least 500 positions this year. 24/7 Wall St. combined all planned cuts by company to identify the companies that have announced the most job cuts this year. We only considered publicly traded American companies. However, job cuts did not need to be entirely within the United States. Some cuts announced this year may not be completed until 2015 or later. Consolidated revenues and employee totals are from each company’s most recent financial report filed with the Securities and Exchange Commission. If the company did not disclose headcount for the quarter, figures from its last annual report were used.
These are the 10 companies cutting the most jobs.