The Biggest Layoffs in American History
News thatConocoPhillips planned to cut 10% of its workforce was perhaps not shocking given the recent downturn in oil prices.
The company, which has already laid off 1,000 workers this year, plans to slash another 1,800 jobs, according toThe Associated Press. Blaming the cuts on the"dramatic downturn" of the energy industry in a statement to the news organization, ConocoPhillips made the cuts in part to offset the $179 million in losses it reported last quarter.
While the cuts by the energy company are significant, they pale in comparison to some of the largest ones in American history. They're similar, however, because in most cases huge layoffs are driven by massive market changes.
ConocoPhillips was caught in an unexpected market situation where oil prices plunged without warning showing no signs of an immediate recovery. Other companies have fallen victim to similar forces -- sometimes beyond their control and other times very much of there own doing.
Here's a look at the four biggest layoffs in American history (in reverse order) according to data compiled byoutplacement firmChallenger, Gray & ChristmasforThe Washington Post.
4. General Motors was on the brinkIn 2009General Motors was teetering on the edge of existence. The company had filed for bankruptcy protection and took a $50 billion loan from the United States government in order to restructure.
At the time of the company's struggles the entire American auto industry was in disarray due to the nationwide economic downturn driving down demand. As part of its restructuring GM closed more than a dozen factories, slashed its executive ranks by 35%, and cuts its overall workforce by 47,000, according to The Washington Post.
It was an unprecedented move for the U,S, government to become involved at that level, but ultimately it was a smart investment. The $50 billion was a mix of direct loans and the government taking an ownership position in the company. GM paid the loans back in 2010 and the U.S. had sold all of its stock by the end of 2013, USA Todayreported.
Without the bailout the company may have gone out of business and the job loss, while significant, would have been much greater.
GM has not only recovered, it has opened new plants such as the one above in Lansing, Michigan which celebrated building its two millionth vehicle in August 2015. Source: GM
3. Sears was not ready to competeFor many yearsSears was an untouchable success story. Through its retail stores and its catalogue the company was a part of many American's lives. The chain sold quality products at a good price and for a long time that was enough to drive growth.
That began to change in the early 1990s with the rise ofWal-Mart which offered lower prices. Sears was not prepared to compete with a challenger which undercut it at every turn and sales slipped necessitating a massive layoff of 50,000 employees in 1993. Most of the cut workers were from the company's sagging catalogue operation which it shuttered that year along with its catalogue stores, The Associated Press reported at the time.
Since those cuts the once-mighty retailer has never really recovered. It merged with K-Mart in 2005 and the combined company has struggled in the face of increased online competition and the ever-growing reach of Wal-Mart.
2. The economy forces cuts at CitiGroupThe second biggest layoff in American history happened during the economic downturn and credit crisis of 2008.CitiGroup was hit hard by the struggling economy and hat to layoff 50,000 workers in order to lower expenses to be able to move forward.
At the time some analysts thought the company had waited too long in the face of obvious problems.
"The patient was diagnosed with cancer a year ago and now they want to start giving them chemo," said William Smith, president of SAM Advisors LLC, told CNN Money. "I think it is too little too late."
That proved not to be true as CitiGroup managed to weather the crisis and remains a viable firm today.
1. IBM slashes its workforceWhenIBM laid off 60,000 people in 1993 the move was shocking because the company had never before cut its workforce. A job at "Big Blue" was a job for life and the move to slash so many employees was driven by whatThe New York Timescalled at the time"part of a desperate struggle to streamline the stumbling computer giant."
These radical cuts were initiated by then CEOLouis Gerstner Jr. whose hiring itself was significant because he came from outside the company when IBM traditionally had promoted from within.The move happened during a period of great change in the computer industry when IBM lost its long-held dominance and needed to radically shift in order to survive.
Ultimately, as painful as the cuts were, the ship was righted and IBM found a new path.
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Daniel Kline has no position in any stocks mentioned. He has never had to fire 50,000 people. The Motley Fool recommends General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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