Target Issues Layoffs: At Least 1,000 To Lose Jobs

Target to cut workforce, issue layoffs
Target to cut workforce, issue layoffs

Target has announced that it will cut 9% of its headquarters staff and close a Arkansas distribution center,  which includes 600 employees and 400 open positions, according to a statement issued by the company. These changes will be effective immediately.

Target will also close a distribution center in Arkansas, which employes another 500 people, later in the year.

“We are clearly operating in an unprecedented economic environment that requires us to make some extremely difficult decisions to ensure Target remains competitive over the long term,” Gregg Steinhafel, president and chief executive, said in the release.

Target has taken other steps to cut costs as well, including salary freezes for senior management, suspending share repurchase activity, tightening credit card underwriting and granting, improving store productivity as well as cutting back on opening new stores.

This follows months of lower-than-expected sales at Target stores, as the retail industry continues to struggle. This, combined with a poor outlook throughout 2009, the company claims its actions are a conservative approach to planning.

From the release:

Headquarters employees affected by the announcement will continue to receive their full pay and benefits through April 1, after which they will receive a comprehensive separation package based on their years of service. As part of that package, Target also will provide these employees with 12 months of continued Target health care benefits in addition to 12 months COBRA benefit, and outplacement support to assist them in transitioning to their next position. Little Rock distribution center employees will be offered positions at other Target distribution centers, or will receive comparable severance.

As a result of these actions, the company expects to record a charge of approximately 3 cents per diluted share, the majority of which will occur in the company’s 2008 fourth quarter. The company believes the annualized benefit resulting from these actions will exceed the charge.

Layoffs, Layoffs, Layoffs

In the news today are several large companies announcing large layoffs, including Caterpillar, ING Group, Sprint Nextel, Pfizer, Home Depot, Deere, Philips and Corus. Total job cuts announced today total approximately 61,000 jobs.

Caterpillar, the construction giant will be cutting 20,000 jobs. These job losses are in line with a 25% decline in sales volume.

ING Group, the Dutch financial services company, will shed 7,000 jobs as a result of losses from toxic mortgage debt.

Sprint Nextel is cutting 14% of its workforce, or 8,000 jobs, as it seeks to cut annual costs by $1.2 billion. The company has struggled recently to compete with other feature-rich phone providers and had difficulty successfully merging Sprint and Nextel together.

Pfizer, the world’s largest prescription drug maker plans to cut at least 4,000 jobs as it merges with Wyeth, a smaller competitor. On the bright side, this is the first big merger backed by Wall Street in months.

Pfizer's Jeffrey Kindler. Source: The New York Times
Pfizer's Jeffrey Kindler. Source: The New York Times

Home Depot will slash 7,000 jobs, or 2% of its workforce, to help survive the extended retail slump.

Farm-equipment maker Deere & Co. says it will lay off or temporarily reassign almost 700 workers at factories in Brazil and Iowa.

Europe’s largest consumer electronics group, Royal Philips Electronics will cut its workforce by 6,000 worldwide this year after reporting its first quarterly loss for almost six years.

Britain’s largest steelmaker, Corus, is poised to cut up to 3,500 jobs this week in one of the biggest blows yet to the faltering manufacturing sector.

Additionally, the United States Postal Service continues to talk about impending layoffs, but has not released information about when it might make such a move or how many people it would need to lay off.

American Postal Workers Union President William Burrus last week:

Approximately 3,500 APWU-represented employees are exposed to the possibility of layoffs. The remaining APWU-represented employees are protected, but other changes will affect them, including relocations and reassignments. Part-time flexible and light-duty employees will experience work-hour reductions to a level that cannot support a family. The toleration for absences from work will be diminished, so that many absences will be challenged, requiring the application of the contractual “just cause” standard.

Until mail volume returns to previous levels, postal employees should anticipate that many, many changes will be imposed. The union will apply the contractual standards to each change, but many will be beyond the contractual limitations.

Bring on the Rumors for USPS’ “Big Annoucement” Friday

UPDATE (Friday 1/16 2:05 p.m.): The USPS has said it has “nothing to announce today“.

Rumors are flying about a “Big Announcement” from the United States Postal Service to be announced this Friday, January 16. On several blogs covering Postal Service issues, the topic is hot. Local postal workers near our offices know about the announcement and all have their own theories.
The United States Postal Service
Because the Postal Service is such a large agency, the Big Announcement could be able pretty much anything (or nothing), but since there has been such an interest in what it’s going to be, we compiled a list of the leading possibilities:

Mass layoffs: The USPS could be planning to enact a Reduction in Force (RIF), the government’s term for layoffs. Usually a cost-cutting measure, the RIF will determine which employees will be laid off based on length of tenure, veteran’s standing, and employee standing and performance. Full explanation of RIF policies can be found here.

Early-out incentives: Another theory along these same lines is a program that may encourage people to retire earlier. Such an early-out offer may offer benefits like reducing or eliminating the penalty for Civil Service Retirement System (CSRS) takers or tax breaks on retirement benefits.

Postmaster General to resign: John Potter has served as the United States Postmaster General and CEO of the United States Postal Service since 2001, and has been involved in a recent investigation for receiving discounts and other benefits from Countrywide Financial Corp. Countrywide, a leading subprime lender has been a major player in sparking the financial crisis and has been criticized for using low teaser rates to lure in homebuyers that could not afford the houses they were purchases.  The investigation began in November, and this could be the culmination of that.

Potter was also publicly supportive of Chief Postal Inspector Alexander Lazaroff as he was being investigated for squandering USPS money on unnecessary travel and gambling last year.

Rate hikes: The USPS may be making an announcement about the shipping rates increasing. The rate hikes are schedule to take effect on January 18.

Working with Obama: Though the USPS is relatively autonomous, this announcement does come just days before the inauguration of President-Elect Barack Obama. This could be a policy address attempting to get in under the wire.