A Manufacturing Recession Is Here. Now What? (#GotBitcoin?)
With the U.S.-China trade war sapping demand, companies have limited options for protecting profits. Plus, more industrial insights. A Manufacturing Recession Is Here. Now What? (#GotBitcoin?)
The escalation of U.S.-China trade tensions has pushed the American manufacturing sector to the brink of a recession and there’s little to stop it from falling over the edge. A preliminary IHS Markit gauge of factory activity released this week came in at 49.9 for August, just below the dividing line that separates an expansion from a contraction.
A regional index from the Federal Reserve Bank of Kansas City showed manufacturing order volume slumped to the weakest level since 2016, with more than half of firms surveyed expecting negative impacts from the 10% tariffs the U.S. will levy on $300 billion of Chinese goods in two stages. China retaliated on Friday with its own one-two punch of tariffs on $75 billion of American products including soybeans, automobiles and oil. President Donald Trump vowed to respond … again. So it would seem to be a better use of time to move beyond debating whether there will be a slowdown and instead think about how industrial companies are going to respond to a slowdown that’s already here and will likely get worse.
The most obvious move is to cut expenses, which will inevitably translate into layoffs. Deere & Co., Emerson Electric Co., 3M Co. and DuPont de Nemours Inc. are among those that have said they’ve stepped up cost-cutting efforts. This is tricky for several reasons. First, many big manufacturers have already aggressively cut costs after slumping oil prices brought about the so-called industrial recession in 2015 and 2016. Perhaps this prepared them to more profitably weather the next downturn; perhaps it left them with less fat to cut if margins are pressured by price cuts to spur sales. But the bigger issue is that layoffs, particularly in the manufacturing sector, are going to be political dynamite.
President Donald Trump built his campaign on revitalizing hiring at U.S. factories, and manufacturing employment is up by about a half million since he took office. He’ll be wont to relinquish those gains as he seeks re-election, especially if job losses start to affect the strong consumer demand that’s kept U.S. growth afloat. It’s much harder to issue puffball press releases about firings than it is to expound on hiring commitments, exaggerated or not.
So what about share buybacks? Some companies may already be too loaded up on debt after years of low-interest-rate borrowings. Honeywell International Inc. and Eaton Corp. are among those that have alluded to the ability to unleash billions of purchasing power to prop up earnings per share in a recession. Democratic presidential candidates including Senators Elizabeth Warren, Kirsten Gillibrand and Bernie Sanders have all criticized buybacks and proposed ways to incentivize companies to share their wealth more directly with employees. Some of these proposals have clear holes and obviously not all buybacks are evil, but public opinion is negative on this issue and any manufacturer that announces a big repurchasing push should expect backlash. The Business Roundtable sees the writing on the wall, at least as far as optics are concerned.
Member CEOs including 3M’s Michael Roman, Honeywell’s Darius Adamczyk and Stanley Black & Decker Inc.’s Jim Loree signed their names this week to an updated statement of purpose that said companies have a commitment to serve all stakeholders, not just shareholders. It was mostly fluff and there were no hard commitments behind the nice-sounding words. Still, it’s the latest sign that capitalism in its most unbridled, bloodthirsty form is being rethought.
And maybe that’s a good thing for investors, too: Bloomberg News’s Cameron Crise took a look at the GS Total Cash Return index, a collection of 50 stocks that return a well-above-average amount of cash to shareholders. He found that while those stocks have historically been winners, they’ve barely outperformed the S&P 500 in the aggregate over the past five years, with the lag over the past four months one of the most extreme since the index started in 2010. The political climate is arguably causing this industrial slowdown; it may also kneecap companies’ ability to protect their earnings from the associated damage.
Majority of Economists Say Manufacturing Sector in Recession
Forecasters’ estimates for economic growth in the second half of 2019 also ticked lower.
U.S. manufacturing is in recession, two-thirds of economic forecasters said in a survey, and overall growth in the second half of 2019 is expected to further slow.
In a Wall Street Journal economic survey conducted in recent days, 65.3% of private-sector forecasters said the manufacturing sector was in recession, or two or more consecutive quarters of contraction.
Forecasters’ estimates for economic growth in the second half of 2019 also ticked lower, with U.S. economic output to grow, on average, at a 1.82% pace in the third quarter and a 1.77% rate in the fourth quarter. Those figures are down from a September survey predicting 1.92% and 1.81% growth rates, respectively.
Respondents largely cited the uncertain trade picture, weak global growth and U.S. political developments in their comments on the economic outlook.
“It’s a laundry list of ‘shocks’ that are coming one after the other: global growth hiccups, Boeing Max fiasco, IPO market fizzle, GM strike, election cycle swoon and getting compounded by the impeachment drama,” said Georgia State University economist Rajeev Dhawan.
Manufacturing data is closely watched not just for what it says about factories, but for the signal it sends about demand in the wider economy. U.S. factory activity contracted for the second straight month in September and hit a 10-year low, the Institute for Supply Management reported earlier this month.
New orders for durable goods—products designed to last at least three years, such as computers and machinery—were down 4.2% in August from a year earlier, the Commerce Department said last month.
“But factory employment is still among the highest we’ve seen in more than a decade, so it’s premature to say it is in recession,” said Bernard Baumohl, chief global economist at the Economic Outlook Group, in the survey.
Chad Moutray, the National Association of Manufacturers’ chief economist, said manufacturing business leaders are pushing for greater certainty on trade, including a reworked trade agreement with Mexico and Canada and a bilateral trade agreement with China.
Manufacturing makes up a relatively small slice of GDP, accounting for about 11% of total output and about 10% of total private employment. A contraction in the sector doesn’t necessarily mean the 10-year-old expansion is about to end.
Manufacturing Sputters as Broader U.S. Economy Slows
A loss of momentum in U.S. manufacturing aligns with weakening factory output overseas.
U.S. manufacturing production fell in September, adding to evidence that slowing global growth and trade frictions are weighing on the economy.
Manufacturing output, the biggest component of industrial production, fell 0.5% in September from a month earlier, the Federal Reserve said Thursday. Production at factories was in part dragged down by a strike at General Motors , but showed broad-based fragility.
Overall industrial production, which includes output at factories, mines and utilities, dropped 0.4% in September and declined 0.1% from a year earlier, the first year-over-year decrease since 2016. Mining production pulled back, helping further drag down demand for manufactured parts.
Industrial production has cooled this year, dragged down by manufacturing.
For some manufacturers, the tight labor market is curtailing growth.
Brett Novosat, president at machine shop L.L. Brown Inc., said revenue is down about 5% to 10% this year as the Enola, Pa., company has struggled to replace workers who have left. Demand for metal parts is still strong, he said, but his 26-person company can’t find new workers to meet that demand.
“If I could find three, four, five machinists I would hire them right now,” he said. “We are at a limit this year for what we could do with the employees we have.”
Coatings maker PPG Industries Inc. said Thursday that it saw a notable weakening in industrial production which sent sales volume in its industrial unit down 6%.
Weakness in the U.S. economy this year has largely been contained to manufacturing and business investment, but signs suggest the slowdown could be spreading. Employers are still hiring, albeit at a slower pace than in 2018. Consumer spending has been solid, but data released earlier this week showed September was a soft month for retailers.
“The risk is that the longer the weakness in the industrial complex remains in place, the greater the risk that this diffusion takes hold across other sectors,” said Gregory Daco, chief U.S. economist at Oxford Economics.
On Thursday, the Commerce Department reported home building fell in September. After the figures were released, forecasting firm Macroeconomic Advisers kept its estimate of third-quarter gross domestic product growth at a 1.3% annual rate, down from a 2% annual pace in the second quarter.
Still, the U.S. economy is in growth mode.
“We have a situation where consumers generally are doing pretty well,” said Gus Faucher, chief economist at PNC Financial Services Group.
Federal Reserve policy makers cut interest rates this year with the goal of cushioning the economy against a slowdown in manufacturing and global growth. They will meet later this month, and a rate cut is seen on the table.
The U.S. is a service-oriented economy, meaning manufacturing accounts for a small share of gross domestic product. But the manufacturing sector is highly sensitive to swings in global demand, making it an important indicator of broader economic shifts.
One factor that weighed on manufacturing last month will likely be temporary. The GM strike accounted for a 0.7% decline in production of durable, or long-lasting, goods. That included a steep 4.2% decline in the output of autos and related parts.
“With a tentative deal in place, auto production should rebound in November and December as GM looks to make up for lost output,” Mr. Faucher said.
Still, other forces pushing down factory production, including trade tensions and slowing global growth, offer few, if any, signs of abating.
The loss of momentum in U.S. manufacturing aligns with weakening factory output overseas.
The manufacturing output index in Germany, a key export economy in the eurozone, fell to 101.5 in August from 105.8 a year earlier, Organization for Economic Cooperation and Development figures showed.
Surveys of purchasing managers across the globe pointed to deepening declines in factory activity in September. The U.S. wasn’t immune. The Institute for Supply Management’s survey of supply-chain managers showed manufacturing activity contracted for the second straight month to its lowest level since 2009.
Maersk To Eliminate Hundreds Of Jobs
Redundancies planned at Copenhagen headquarters and German shipping unit Hamburg Süd.
Denmark’s A.P. Moller-Maersk A/S will cut hundreds of jobs to cut costs as the shipping giant prepares for significantly higher fuel costs next year and plans to invest more heavily in inland logistics services.
“We have announced internally the need to save cost in our head office functions and that it will also lead to reductions both in and outside Denmark,” a Maersk spokesman said. “We do not yet know the exact extent or how many are affected, but this is something we are currently discussing.”
People with knowledge of the matter said around 200 jobs will be cut at the company’s headquarters in Copenhagen and at Hamburg Süd, the German container operator that Maersk bought in 2017.
The cuts come as Maersk is seeking to expand its business, which is largely focused on ocean container transport, to do more end-to-end logistics, particularly inland supply services such as warehousing and customs clearance.
“Maersk needs to build up our non-ocean services and this will affect ocean services,” one person familiar with the plan said.
This person said there are overlaps in jobs at the information technology department following the merger with Hamburg Süd, which originally saw its workforce cut by 200 people to around 900 after Maersk’s takeover.
Maersk Chief Executive Søren Skou said this month that he plans to invest hundreds of millions of dollars in expanding inland logistics services next year.
Maersk, the world’s biggest container ship operator by capacity according to data analyst Alphaliner, employs around 75,000 people in more than 120 countries. It has around 70,000 customers in its core ocean transport business, including a broad range of U.S. companies such as car makers and retailers.
The parent company this month reported a net profit of $520 million in the third quarter, up 30% from $396 million a year earlier.
But the Maersk Line operation faces strong headwinds in shipping markets. Analysts have sharply reduced forecasts for growth this year in container markets as big retailers and manufacturers that ship goods internationally facing weakening global economic conditions and rising trade barriers.
Maersk and other ocean carriers also face an average increase of 25% in their fuel bills when vessels will have to start using cleaner fuels as part of a regulatory mandate to cut sulfur emissions.
3M Cuts More Jobs Amid U.S. Manufacturing Slump
Adhesive maker received grand jury subpoena related to discharge from Alabama plant.
3M Co. MMM -5.82% reported lower revenue in key U.S. markets and set plans for fresh layoffs, the latest manufacturer to exhibit signs of strain at a time of weakness for the industrial economy.
3M sells its diverse array of products in a wide swath of the economy, including consumers, offices, manufacturers and hospitals. While the U.S. economy remains strong overall, the manufacturing sector has contracted for five consecutive months through December.
Slow rates of domestic car production, lower shale-drilling activity and slack demand from China have all weighed on U.S. manufacturers. Boeing Co. BA -0.47% ’s decision to first slow and then suspend production of its 737 MAX has also been working its way through the company’s vast supply chain. New orders for capital goods, a proxy for business investment, declined in December from the previous month, the Commerce Department said Tuesday.
“We continued to face growth challenges,” 3M Chief Executive Mike Roman told analysts on a call Tuesday. Shares fell 4.5% to $166.68 in late morning trade.
The maker of everything from Post-it Notes to industrial sandpaper reported a fourth-quarter revenue decline of 2.6% when excluding currency movements and acquisitions, including a 2.9% drop in the U.S. 3M said it was eliminating 1,500 jobs as part of a continuing restructuring to streamline its global operations. The company employs 96,000 people and last April said it was cutting 2,000 jobs in underperforming business lines, such as energy and electronics.
The cuts will save the company up to $120 million a year, 3M said. It booked a $134 million restructuring charge in the fourth quarter related to the cuts.
3M also said Tuesday that it received a grand jury subpoena in late December related to chemical discharges from a facility in Decatur, Ala. 3M said that chemicals may have been released from that plant into the Tennessee River, and that it was cooperating with the investigation by the U.S. attorney’s office for the northern district of Alabama.
The U.S. attorney’s office didn’t respond to a request for comment.
St. Paul, Minn.-based 3M reported that sales in China and Hong Kong grew 0.8% for the latest quarter, even as the economy slows there. As one of the largest makers of medical face masks, the company has ramped up production to meet a surge of demand due to the global outbreak of a coronavirus in China.
At the same time, 3M said extended shutdowns at factories and other businesses in China could weigh on demand for other 3M products. The outbreak gained momentum this month, so the impact to the company’s fourth quarter, which ended in December, was limited.
Sales in 3M’s safety and industrial business fell nearly 5% to $2.81 billion for the quarter, and sales in its transportation and electronics business fell 6.2%. Revenue also declined in 3M’s aerospace unit, which makes industrial glues and other products for plane makers.
The company said sales in the latest quarter rose to $8.11 billion overall from $7.95 billion a year earlier due in part to the October completion of its $4.3 billion acquisition of wound-care company Acelity Inc.
Analysts had expected revenue of $8.11 billion in the quarter, according to FactSet. 3M reported a profit of $969 million compared with $1.35 billion a year ago. Adjusted earnings were $1.95 a share. Analysts polled by FactSet were expecting adjusted earnings of $2.11 a share.
For 2020, the company said it expects earnings between $9.30 and $9.75 a share. Analysts were expecting the company to earn $9.59 a share in 2020.
U.S. Durable Goods Orders Fell in November
A drop in orders for military equipment was behind the retreat
Demand for long-lasting factory goods made in the U.S. fell in November, suggesting the manufacturing sector remained uneven last month.
Orders for durable goods—products designed to last at least three years—decreased a seasonally adjusted 2% in November versus the previous month, the Commerce Department said Monday.
That was well off from expectations. Economists surveyed by The Wall Street Journal had projected a 1.2% increase.
Declining orders for military equipment was the primary cause. Orders for defense capital goods fell 35.6% on the month. Excluding the volatile defense category, overall orders were up 0.8% in November.
A proxy for business investment only inched ahead last month. New orders for nondefense capital goods, excluding aircraft, rose 0.1% in November. Through 11 months this year, those orders were up 0.7% from the same period in 2018, or rising less than the rate of inflation.
The report covers orders placed in November, ahead of a string of economic news in recent weeks that was largely seen as positive for manufacturers. That included progress in trade talks with China, finalizing a new trade deal with Canada and Mexico and Congress passing a defense-spending bill.
Durable orders for October were revised down to a 0.2% increase from an earlier reading of up 0.5%.
Demand for durable goods had mostly trended higher since June. That was an improvement from the first half of the year, when uncertainty around trade policy and concerns about a global economic slowdown hurt U.S. factories.
However, a persistent weak spot has been the volatile civilian aircraft category. Orders for nondefense airplanes and parts fell 1.8% in November. Through 11 months this year, orders are down 38% compared with the same period in 2018.
Boeing Co. , the nation’s largest aircraft maker, has seen orders decline since its 737 Max jetliner was grounded globally in March following two fatal crashes. The company said last week that it plans to halt Max production in January.
Excluding transportation, durable-goods orders were flat in November from October.
U.S. Factory Sector Contracts For Fifth Straight Month
The ISM manufacturing index in December registers its lowest level in over 10 years.
The U.S. factory sector contracted for the fifth consecutive month in December as trade tensions continued to pressure manufacturers.
The Institute for Supply Management said on Friday its manufacturing index fell to 47.2 in December from 48.1 in November. Readings above 50 indicate activity is expanding across the manufacturing sector, while those below 50 signal contraction.
Economists surveyed by The Wall Street Journal had expected a reading of 49.0.
Friday’s data, compiled from a monthly survey of purchasing and supply executives across the U.S., was the lowest reading since June 2009.
“Global trade remains the most significant cross-industry issue, but there are signs that several industry sectors will improve as a result of the phase-one trade agreement between the U.S. and China,” Tim Fiore, who oversees the ISM survey of factory purchasing and supply managers, said in a statement.
Baltic Index Marks Worst Day In 6 Years On Depressing Demand For Dry Bulk Vessel Shipments (#GotBitcoin?)
The Baltic Exchange’s main sea freight index on Thursday posted its biggest one-day percentage decline in six years, pressured by depressing demand for dry bulk vessel segments.
* On its first day of trading in the new year, the Baltic index , which tracks rates for capesize, panamax and supramax vessels that ferry dry bulk commodities, fell 114 points to 976 points, its lowest level since May 2019.
* The overall index declined about 10.5%, posting its biggest one-day percentage drop since January 2014.
* “Some of it represents the fact that it is the first quoting for almost a week now. We expect a bit more softness to come around and we see … China as the main locomotive behind this,” said Peter Sand, chief shipping analyst at BIMCO.
* “The market as such is not strong in a fundamental way,” Sand said, adding the underlying market weakness, seen in the last few months, has seeped into 2020.
* The dry bulk index fell about 61% since touching a multi-year high of 2,518 points in September 2019 and ended the year 14% lower.
* The capesize index fell 304 points to 1,646 – its lowest since May 31, 2019.
* Average daily earnings for capesizes, which typically transport 170,000-180,000 tonne cargoes including iron ore and coal, slumped $2361 to $11,976.
* The supramax index slipped 33 points to 685.
* The panamax index rates were not available. (Reporting by K. Sathya Narayanan in Bengaluru; Editing by Maju Samuel)
U. S. Business Investment Fell In December
U. S. business investment fell in December, according to a closely watched proxy measure, providing the latest sign of softness in manufacturing.
The reading, part of a report on U.S. orders for long-lasting goods, showed that new orders for nondefense capital goods excluding aircraft fell 0.9% in December from the previous month, to $68.6 billion, the Commerce Department said Tuesday. Those so-called core capital goods orders—which set aside volatile defense and transportation orders—are widely viewed as a measure of businesses’ willingness to spend on items such as machinery, equipment and computers.
The department also said new orders for all durable goods—products designed to last at least three years—rose 2.4% in December from the previous month. The increase was driven by defense orders, and came during a month when Congress approved a boost in military spending.
“The headline durable orders gain significantly overstates the strength of the manufacturing sector,” Brean Capital economists Conrad DeQuadros and John Ryding wrote in a note to clients. “Our focus is the nondefense capital goods sector excluding aircraft, which as yet shows no signs of recovery.”
The apparent pullback in business investment last month contrasted with signs of continued strength among U.S. consumers. The Conference Board, a private research group, said in a separate report Tuesday that its index of consumer confidence increased in January from December.
Demand for military equipment surged in December after a steep decline in the prior month, with orders for defense capital goods up 90.2% on the month. New orders for transportation equipment were up 7.6%, boosted by a 168% jump in orders for defense aircraft.
Other portions of the Commerce Department’s report indicated underlying weakness, however. Excluding the often-volatile category of transportation, orders fell by 0.1% last month. Omitting defense, which also can be volatile, orders were down even further, by 2.5%.
Orders for nondefense aircraft fell sharply, which several economists attributed to the continued grounding of Boeing’s 737 MAX passenger jet. Overall orders in November were also weaker than previously estimated, revised to down 3.1%.
Recent data have indicated manufacturing remains on uneven footing. The Federal Reserve reported earlier this month that factory output increased 0.2% in December from November, but a recent survey of purchasing managers from data firm IHS Markit indicated manufacturing activity has slowed during January compared with December.
Other developments could provide a boost for manufacturing and business investment. In addition to Congress’ passage of a government-funding package, U.S. and China officials agreed to the first phase of a trade deal, which was signed into effect on Jan. 15. The deal marked an easing in trade tensions that weighed on the global manufacturing industry for much of last year.
“The phase one trade deal should eventually be a big help in cranking investment activity back up, but December was too early to have expected any notable reaction to the trade agreement,” Stephen Stanley, chief economist at Amherst Pierpont, said in a note to clients.
New durable goods orders overall decreased 1.5% for all of 2019 compared with 2018, with core orders up 0.8% on the year.
Another reading on U.S. business investment, along with a broad measure of the country’s economic output, is expected Thursday when the Commerce Department is to release its first estimates of gross domestic product for 2019’s fourth quarter and full year.
U.S. Manufacturing Activity Contracts Hits Factories Hard
Factories Cut Output, Jobs As Coronavirus Lockdown Bites
A series of business surveys paint an almost uniform picture of sharply declining production, falling new orders and contracting payrolls.
Factories across the U.S., Asia and Europe cut output and jobs at the fastest pace since the global financial crisis, a sign the global economy has entered a deep freeze as governments lock down their populations in an effort to contain the novel coronavirus and minimize mortality.
In the U.S., the Institute for Supply Management said its manufacturing index fell to 49.1 in March from 50.1 in February. Readings above 50 indicate activity is expanding across the manufacturing sector, while those below 50 signal contraction. The index has been in contractionary territory for six of the past eight months.
Pullbacks in demand, production and employment—as well as challenges in running factories during the outbreak—offer few signs of improvement ahead. “I think April’s going to be a lot worse,” said Tim Fiore, who oversees the ISM survey of factory purchasing and supply managers.
Separately, data firm IHS Markit said its seasonally adjusted final U.S. manufacturing purchasing managers index dropped to 48.5 in March from 50.7 in February.
A series of business surveys released Wednesday painted an almost uniform picture of sharply declining production, falling new orders and contracting payrolls. The main exception was China, which registered a slight rebound in activity as its economy began to thaw out, having been the first to be frozen.
Factories across the globe reported a series of challenges. Some had shut entirely as workers were forced to stay at home to meet social-distancing requirements. Some had been forced to cut output because the raw materials and parts they needed had become scarce. And others had cut back because demand had fallen as the global economy entered a downturn.
Factory output and employment is likely to fall further before it starts to rebound, although that recovery may be limited by job cuts and shutdowns that can take time to reverse. If they don’t receive help from governments and forbearance from banks, some manufacturing companies may close for good.
“Manufacturing conditions are likely to get worse,” said Rosie Colthorpe, an economist at Oxford Economics. “Increasingly strict lockdown measures, both in the eurozone and globally, will shut even more factories. Rising layoffs in the industrial sector reported in March mean factories won’t be able to immediately restore production once containment measures are lifted.”
In addition to China, there were other countries where some aspects of manufacturing activity defied the general trend. Turkish factories hired additional workers, and both the Netherlands and Taiwan just about managed to avoid a decline in overall activity in the sector.
But in most other countries the freeze has taken a huge toll on factories, overshadowed only by the toll it has taken on service providers.
In Europe, Italy has been hardest hit by the virus, and its manufacturing sector was hardest hit by the measures taken to contain it. Data firm IHS Markit’s Purchasing Managers Index, a measure of activity in the sector, fell to 40.3 in March from 48.7 in February.
A reading below 50.0 indicates a decline in activity compared with the previous month, and the measure for March points to the largest drop in almost 11 years.
“With the Italian economy effectively shut down, it is unlikely that any recovery from the significant Covid-19 disruptions will be swift,” said Lewis Cooper, an economist at IHS Markit.
Factories in Greece, Poland and the Czech Republic were also hit hard by lockdowns and other setbacks. Germany, the continent’s manufacturing powerhouse, saw the largest drop in output since the immediate aftermath of the financial crisis, although the impact was mixed across industries. IHS Markit said producers of tools and equipment, and automobiles saw the largest declines, while makers of cleaning products and protective clothing reported a pickup in output and hiring.
Food producers also reported a pickup as German shoppers stocked up on essentials, a practice known as “Hamsterkäufe,” or hamster-shopping. Figures released Wednesday showed German retail sales increased sharply in February in anticipation of lockdowns to curtail the coronavirus pandemic.
In Asia, Vietnam and the Philippines logged the largest declines in activity, the latter registering an even larger drop than Italy. But big declines were also reported in Japan, South Korea, Indonesia and Thailand. In each of those countries, factories cut jobs.
In Europe, governments have rolled out a series of measures intended to limit the rise in unemployment as large parts of the economy hibernate. They include a series of programs that pay a big chunk of the wages of workers that companies have been forced to place on reduced hours.
The German Labor Agency Tuesday said around 470,000 businesses asked staff to work shorter hours in March, a record high. Detlef Scheele, the agency’s chairman, said the number of workers on state-subsidized short-time work schemes would likely rise considerably higher than its peak during the 2008-09 financial crisis, when 1.4 million workers took advantage of the program.
Continental AG , the German automotive supplier, Wednesday said that in light of the temporary shutdown of nearly half its 249 factories, including most of its operations in Europe and the U.S., 30,000 German employees, or half the workforce in its home country, had been put on short-time work as of April 1.
“We have agreed with employee representatives to use all available options in the coming weeks to respond to this crisis in a flexible manner,” Ariane Reinhart, Continental’s executive board member for human resources. “Our mutual goal in the current phase is to protect our employees and to protect jobs. Instruments such as short-time work in Germany help us here.”
In Switzerland, takeup appears likely to be high. Its survey of purchasing managers found that more than a quarter of manufacturing companies have already applied for government help, affecting 13% of their workers on average.
Even with those schemes, the number of people without work is expected to soar in Europe during the coming months. But that rise will take place from a low level: According to figures released by the European Union’s statistics agency Wednesday, 88,000 people found work across the eurozone in February, lowering the unemployment rate to 7.3% from 7.4%, its lowest since March 2008.