Challenger: Airlines, Autos, Retail Lead Layoffs

NEW YORK – 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 Wednesday.

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 (search)., 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 (search), chief executive officer of Challenger, Gray & Christmas said in a release.

"General Motors (GE) 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 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.