Lowe’s lays off thousands of workers as “retail apocalypse” continues
The home improvement retailer Lowe’s announced an unspecified number of layoffs, expected to number in the thousands. According to the company and its employees, layoffs will consist of assemblers, who piece together items for customers, and maintenance and facility-service jobs such as janitors. Lowe’s will outsource these jobs to third-party companies.
“We are moving to third-party assemblers and facility services to allow Lowe’s store associates to spend more time on the sales floor serving customers,” a spokesperson for Lowe’s said.
The layoffs at the home improvement giant coincide with the further contraction of the retail sector of the economy. On Tuesday, Walgreens announced it will close 200 US stores, a few months after the pharmacy giant said it planned to cut $1.5 billion in annual costs by 2022. The shutdowns, whose locations have not yet been revealed, will start in the fall. On Wednesday competitor CVS Health said it would reduce the number of stores it planned to open over the next few years from 300 to 150 after announcing in May that it was closing 46 underperforming stores.
Although Lowe’s refused to say how many jobs will be lost, the company said the targeted workers will receive transition pay and have an opportunity to apply for other open positions. According to a securities filing in February, Lowe’s employed approximately 190,000 full-time and 110,000 part-time employees in the United States, Canada and Mexico.
Lowe’s employees expressed indignation about the company’s move and CEO on The Layoff, an anonymous online discussion board for mass layoffs.
One worker said, “[The CEO] really is a sack of s–t. He doesn’t care one bit about ANY employee..”
“Lowe’s doesn’t create jobs without taking away jobs. In order to build the technology center in Charlotte Marvin [Lowe’s CEO Marvin Ellison] needed funding while at the same time he needs to increase the dividends paid to shareholders,” another said.
“In the past year our customer count has dropped, sales have dropped, customer service is nonexistent, Stock price is flat, profits are down, morale is terrible, and finally Tens of THOUSANDS of Loyal, Productive, Tenured Employees have been TERMINATED!!!!”
Ever since CEO Marvin Ellison, the former CEO of near bankrupt retailer JCPenney, took control of the company in July of last year, Lowe’s has been engaged in a savage cost-cutting campaign to compete with Home Depot, the largest home improvement retailer in the US. Last year, Lowe’s shuttered 51 stores in the US and Canada and shut down its 99 Orchard Supply Hardware stores. In April, the company announced the end of its nine-year venture in Mexico with the closure of its 13 stores in the country.
The company’s string of store closures and layoffs is part of a broader ongoing trend since the Great Recession, which has been fueled by stagnating wages and online purchasing spearheaded by Amazon. The “retail apocalypse” has devastated North American brick-and-mortar retail stores since 2010. Since the financial crisis, the retail industry has seen a myriad of buyouts, mergers and acquisitions as large and small retailers are forced into bankruptcy or outright liquidation by financial parasites on Wall Street.
According to tracking by Coresight Research, more than 7,000 store closures have been announced so far this year. However, Coresight predicts that the tally could reach up to 12,000, setting a new record of store closures in a year.
Despite the lowest official unemployment rate in 50 years, bankruptcy related layoffs are reaching heights not seen since the 2008–09 global financial crash. According to a Challenger, Gray & Christmas report, US companies have announced 42,937 job cuts due to bankruptcy in the first seven months of the year, up 40 percent on the same period last year and nearly 20 percent higher than all bankruptcy-related job losses last year.
Companies cited bankruptcy as the reason for 11.6 percent of all job cuts announced from January to July. This is a 0.3 percent increase since the same period in 2018. Bankruptcy has also accounted for approximately 6 percent of all job cuts every year since 2007.
The report stated, “It is the highest seven-month total since 2009 when 50,258 cuts due to bankruptcy were announced… In fact, it is higher than the annual totals for bankruptcy cuts every year since 2009, when 50,911 were announced for the entire year.”
This is part of a global trend. On Tuesday, Tesco announced that it was cutting 4,500 jobs at 153 Tesco Metro supermarkets, adding to the 9,000 jobs the UK’s biggest retailer warned were at risk earlier this year. According to the British Retail Consortium, the number of people employed in retail is down 72,000 from a year ago.
As German industrial production records “devastating” fall
Bond markets point to global recession
Global bond markets are sending a clear message that significant sections of the world economy are moving into a recession, if they are not already in one.
This week yields on government bonds have been falling as investors seek a “safe haven.” At the same time the price of gold, the ultimate store of value, has been steadily rising and has topped $1,500 per ounce, its highest level in six years.
The immediate trigger for the rush to safety was the new tariff threat against China by the Trump administration and the devaluation of the Chinese currency, the renminbi, on Monday, which led to the decision by the US Treasury to name China as a “currency manipulator.”
The Treasury decision may not have an immediate direct effect but it has raised the spectre of a global currency war as central banks around the world cut their interest rates, thereby lowering the value of their currencies, or prepare to do so, in what has been characterised as a “race to the bottom.”
Yesterday three central banks in the Asia-Pacific region cut their rates. The New Zealand central bank reduced its rate by 0.5 percentage points, double the cut that had been expected. Thailand’s central bank cut its base rate by 0.25 percentage points, contrary to market expectations it would keep it on hold. India’s central bank dropped its rate by 0.35 percentage points, taking it to the lowest level in nine years.
The major central banks are also expected to move as well. The European Central Bank has signalled it is ready to carry out further monetary stimulus at its meeting next month. The US Fed is expected to announce a further reduction in its base rate by at least 0.25 percentage points, and possibly more, following its rate reduction last month.
St Louis Fed president, James Bullard, said yesterday he thought the US central bank “can do more policy adjustments.”
US President Donald Trump has continued his demand for a reduction in US rates, saying the Fed moves should be “bigger and faster” and has again indicated the focus should be on positioning the US in what is emerging as a global currency conflict.
“Incompetence is a terrible thing to watch, especially when things could be taken care of sooo easily,” he tweeted. “It would be much easier if the Fed understood, which they don’t, that we are competing against other countries, all of whom want to do well at our expense!”
The growing global financial turbulence led to major swings on Wall Street. The Dow falling by 589 points in early trading before moving up to finish only 22 points down for the day. The S&P 500 index finished 0.1 percent higher after falling by as much as 2 percent when trading began.
The yield on 10-year Treasury bonds, which move in the opposite direction to their price, dipped below 1.6 percent, before rising slightly.
In a somewhat concerned editorial published yesterday, the Wall Street Journaltook issue with the US decision to impose new tariffs on China. It noted that multiple reports from the White House indicated Trump had overruled all his economic advisers, save the anti-China hawk Peter Navarro, in making the move. Since then, it said, “global and American economic conditions have been heading south.”
It pointed to the contradictions in the Trump economic agenda. The trade policy was contributing to exchange rate instability, leading to a rising dollar as capital flowed into the US seeking a safe haven. China was not manipulating its currency but was setting a lower peg to reflect supply and demand.
“We aren’t predicting a recession, but then few thought we were in a recession in mid-2008 either,” the editorial said, warning that economic expansions do not end on their own but flow from policy mistakes. Calling for at least a trade truce, it concluded: “Mr Trump’s willy-nilly trade offensive could be the mistake that turns a slowdown into the Navarro recession.”
The signs of a global slowdown, if not an outright recession, are most evident in the trade-sensitive Asia-Pacific region, as shown by yesterday’s central bank rate cuts, and in Germany.
Figures released yesterday show that industrial production in Germany, the euro zone’s largest economy and the key driver of economic growth, fell by a larger than expected 1.5 percent in June. According to a Reuters’ poll, analysts had predicted it would drop by just 0.4 percent.
With industrial production now down by 5.2 percent from its level in June 2018, there are fears that Germany is heading for its first recession in six years.
Commenting on the latest data, Carsten Brzeski, the chief economist at the financial firm ING, said: “All in all, we would characterise today’s industrial production report as devastating, with no silver lining.”
In its report on the German data, the Financial Times said the figures “highlight how a crisis in the carmaking industry and an intensifying trade war between the US and China have turned Germany from being the powerhouse of the euro zone into one of its weakest performing members.”
While the car industry is the focus of the decline, industrial production was down across the board. The deputy head of economic research at Commerzbank said the crisis in the car industry was continuing “unabated.” “However, the main reason for this weakness is now likely to be significantly weaker foreign demand.”
Alexander Krueger, an economist at Bankhaus Lampe, said the ongoing “plunge in production” was “scary” and the longer it continued “the more likely it is that other sectors of the economy” would be dragged into it.
No comments:
Post a Comment