October 5, 2005

Airlines, autos and retail lead layoffs

NEW YORK (Reuters) - Planned layoffs in September were
pushed up by job cuts in the ailing airline and auto industries
and consolidation in the retail industry, a report said on

Although planned September layoffs were 33 percent lower
than a year ago they rose to 71,836 in September when compared
with 70,571 in August, said Challenger, Gray & Christmas Inc.,
an employment consulting firm.

Challenger also said planned hirings fell to 15,666 in
September from August's 27,581 -- snapping three consecutive
months of increases in announced hirings.

Both the airline and automotive industry face similar
challenges to profits from rising costs.

The high cost of benefits for workers and retirees of a
unionized work force and the rising cost of energy and raw
materials are diminishing their profits.

"Air travel and car sales are strong enough that these
companies should be flourishing, but so much of their revenue
goes toward growing legacy costs that it becomes necessary to
cut costs constantly," John A. Challenger, chief executive
officer of Challenger, Gray & Christmas said in a release.

"General Motors alone will pay $60 billion in retiree
health benefits and $87 billion in pension payments this year,"
Challenger said.

So far this year 783,652 jobs cuts have been announced
compared with 724,320 announced through September 2004. Nearly
11 percent of the layoffs announced this year have been in the
auto and auto part supplier industries, the report said.

In the retail sector, merger and acquisition activity is
causing a reduction in jobs. More than one out of every seven
cuts announced this year resulted from a merger, the report
said. If holiday sales are lackluster, as analysts expect, the
retail sector could face even more layoffs.

Analysts are concerned that higher energy costs, which are
increasing the cost of gasoline and heating oil, will crimp
consumer spending, Challenger said.

Hurricanes Katrina and Rita indirectly contributed to job
cuts as the destruction caused already high fuel costs to
spike. However, Challenger said U.S. firms reported few layoffs
as direct results of the storms which hit the U.S. Gulf Region
within weeks of each other.

"More Katrina and Rita-related job losses may come in the
months ahead as companies decide to close or relocate their
operations out of the Gulf region. It may be difficult to
track, however, as some employers could quietly fade out of the
picture," Challenger said.