US firms to slash thousands of jobs

Home Depot, a US retailer of home appliances, also announced it was to cut 7,000 jobs and closing its smaller Expo chain as the slumping US economy continues to hit the nation’s housing market.

Obama package

Barack Obama, the US president, cited the job losses on Monday as the reason the US could not afford “distractions” or “delays” when it comes to the $825 billion economic stimulus plan currently being debated in US congress.

Some Republicans have argued that the package is too large and does not include new tax cuts.

Although Republicans do not have enough votes in the House of Representatives – which is expected to vote on the package bill on Wednesday – or the US senate to defeat the bill, they could stall it for several weeks.

Al Jazeera’s John Terrett says the job cuts are happening because US firms are currently in the middle of reporting fourth quarter results and many US firms are reporting profits sharply down or even financial losses.

“[This] is leading firms’ chief financial officers to argue that they cannot keep the same numbers of staff,” he said.

The job losses also come as the senate is expected to confirm Timothy Geithner, former chief of the New York Federal Reserve Bank, as US treasury secretary later on Monday.

Geithner is expected to be confirmed as treasury secretary [GALLO/GETTY]

Geithner’s nomination process had been complicated by questions over claims he had underpaid taxes, Reuters news agency reported.

Caterpillar, which employs more than 112,000 people worldwide, has expanded dramatically in recent years, driven partly by rising demand in developing countries, particularly in Asia.

However, this demand has fallen with the weakening global economy.

In addition to the job cuts, the firm said it planned to slash executive compensation by up to 50 per cent and offer buyouts to US-based employees.

Investors hope that plans by Obama to implement a US-wide infrastructure spending programme will bolster demand for road-building and other equipment made by Caterpillar.

However, analysts say the plan may have little impact on equipment demand in the short term and that the proposed figures would not be enough given steep declines in the US construction market.

Voluntary lay-offs

Sprint said about 850 of the reductions would be voluntary, and the firm said it would also extend a freeze on salaries.

The Kansas-based firm has reportedly been in difficulty since acquiring Nextel Communications in 2005 as technical problems, faltering efforts to consolidate the two companies and stiff competition has led many subscribers abandoning the firm.

Meanwhile, Home Depot said in addition to the 7,000 job cuts, a further 2,000 “non-store” jobs would be lost, totalling about two per cent of its workforce.

Its executive officers’ pay will also be frozen, the firm said.

A total of 2.6 million US jobs were lost in 2008, the largest slump in employment since a 2.75 million drop in 1945, the US department of labour said earlier this month. Unemployment rate reached 7.2 per cent last December.