NEW YORK: Some of the biggest names in US industry are cutting back staff and shutting plants in Europe as the continent is buffeted by grinding recession and a never-ending financial crisis.
Releasing quarterly earnings reports over the past two weeks, US industrial giants say they are feeling the squeeze everywhere, citing the slowdown in China and uncertainty at home in the United States.
But with the eurozone crisis, businesses are singling out that region especially for cuts, aiming to boost savings and lower exposure to markets marked by overcapacity and falling prices.
Ford, Dow Chemical, and Kimberly-Clark all announced cutbacks specifically in Europe this week, while DuPont, Colgate-Palmolive and computer chip maker AMD said they would be scaling back work forces or capacity without saying exactly where.
Coca-Cola two weeks ago said it was moving the offices of its huge bottler, Coca-Cola Hellenic Bottling, out of crisis-mired Greece, sparking fears of coming layoffs there.
“Undoubtedly businesses are concerned about world growth, not necessarily US growth but Europe and Asia as well,” said economist Joel Naroff.
“They don’t foresee growth in Asia and Europe in the short term,” said Gregori Volokhine of Meeschaert New York.
“The only market where there is still a little bit of growth is the United States.”
Even in the US, Volokhine added, businesses are on edge: They do not know how taxation and spending policies might change after the November 6 presidential election.
“So to protect their bottom lines they have no choice but to tighten up.”
Much of the belt-tightening is in Europe.
Facing a $1.5 billion loss in Europe this year, Ford Motor announced it would close three plants, two in Britain and one in Belgium, and cut 6,200 posts.
Dow Chemical announced Tuesday it would let 2,400 workers go as it shut 20 facilities worldwide, including at least four plants in Europe.
Dow said sales in Europe fell 10 percent in its third quarter, and prices fell 12 per cent.
“The reality is we are operating in a slow-growth environment in the near term and, while these actions are difficult, they demonstrate our resolve to tightly manage operations - particularly in Europe,” said chief executive Andrew Liveris.
On Wednesday Kimberly-Clark, which makes Kleenex tissues and other popular personal-care brands, said it would be paring 1,300-1,500 jobs in Europe, citing a sharp decline in sales in the region.
Evariste Lefeuvre of Natixis said companies made deep adjustments to their US operations in 2007-2008, cutting staff and production capacity when the US plunged into recession.
Now it is Europe’s turn, he said, where “the prospects for growth are deplorable.”
Besides the fall in business turnover, the US multinationals have suffered unfavorable exchange rate shifts as the dollar has strengthened against the euro for the past year, diminishing the value of the revenue on the continent.
American firms expect a deep downturn in Europe.
Construction equipment maker Caterpillar said it foresees improving conditions in the US, China and other developing countries over the next year, but said challenges would persist in Europe.
Naroff said the businesses were taking a cautious stance and might not undertake all the cutbacks they have announced right away.
“They are protecting themselves,” he told AFP.
“A lot of them are talking about it happening over the next 18 months.”
The bad news is not likely finished. In the auto industry especially, most manufacturers said they are suffering overcapacity that is forcing up their costs and eroding profits.
After Ford’s moves, the leading US automaker, General Motors, which has blamed European losses for a plunge in its earnings, is also expected to soon announce capacity cuts in Europe.
AFP
