According to 24/7 Wall St., the cause of mass layoffs is the result of one of two conditions: industries near the end of their most successful periods, or flailing companies in difficult economic conditions.
When large companies undergo tough fiscal times or face pressures from a stagnant economy, they are not immune to resorting to layoffs in order to stay competitive, which sometimes results in tens of thousands of people losing their jobs at once.
Read on and check out the staggering numbers behind the 7 largest corporate layoffs in U.S. history.
Industry: Aerospace, Defense
Employees laid off: 31,000
Date: September 2001
Following the 9/11 terrorist attacks, Boeing was suffering from a sudden drop in orders and a nationwide recession. Airline revenues plunged when passengers canceled flights en masse following the attacks, causing them to cut back orders despite billions of dollars in federal aid packages.
Boeing was unable to absorb the sudden plunge in profits, and the company was forced to lay off 31,000 of the roughly 93,000 employees who worked in its commercial airline sector.
Employees laid off: 35,000
Date: January 2002
Around the turn of the millennium, legacy healthcare costs, higher fuel prices, and a faltering economy led to falling market shares, declining sales, and diminished profit margins for Ford. Most of the corporate profits came from financing consumer automobile loans through Ford Motor Credit Company.
When the U.S. economy began contracting rapidly starting in 2001, Ford joined other companies such as Target and United Airlines in making massive cuts to their workforce. Ultimately, two million jobs were shed by US corporations in 2001, and layoffs were carried out in all segments of the economy—from retail to manufacturing to finance.
Employees laid off: 40,000
Date: January 1996
Following the deregulation of the U.S. telecom industry via the Telecommunications Act of 1996, AT&T began laying off a huge number of workers in a bid to create more shareholder value. In the process, the majority of AT&T Technologies and the renowned Bell Labs were spun off as Lucent Technologies in order to “protect the jobs of the 270,000 people who will make up the three new companies,” according to CEO Robert Allen.
AT&T has since implemented multiple mass layoffs, including one in 2008 when they cut 12,000 jobs due to “economic pressures, a changing business mix, and a more streamlined organizational structure“.
Employees laid off: 47,000
Date: February 2009
During the 2008 financial crisis, there was a separate but also severe crisis in the automobile industry. As the credit crunch stifled consumer demand and rising fuel costs hurt sales of American power vehicles, General Motors was losing billions every quarter. It was estimated to have lost $51 billion in the three years before the 2008 financial crisis even began.
GM spun off many of its employees in certain divisions into independent companies and ultimately underwent Chapter 11 bankruptcy restructuring, costing 47,000 employees their jobs.
Employees laid off: 50,000
Date: November 2008
When the infamous financial crisis of 2008 hit the world, Citigroup was one of the biggest and most bloated financial institutions, covering a range of services including insurance, corporate banking, investment banking, and consumer banking.
After being forced to take $20 billion in TARP bailout funds, the company engaged in a series of mass layoffs in order to stem billions of dollars in losses. The company ultimately trimmed 50,000 of its 352,000 workforce.
2. Sears & K-Mart
Industry: Department stores
Employees laid off: 50,000
Date: January 1993
Prior to the merger between retailers Sears and K-Mart in 2005, each firm underwent a series of major job cuts. The largest of the pre-merger layoffs came in 1993, where 50,000 workers were let go from Sears, following its discontinuation of the famous general merchandise catalog due to sinking sales and profits.
Not to be outdone, Kmart cut 35,000 people in 2003 just before entering bankruptcy and ultimately being merged with Sears in a move that analysts expected would save the companies $500 million a year.
Industry: Computer hardware, Computer software, IT Consulting
Employees laid off: 60,000
Date: July 1993
In the run up to 1993, IBM was in deep trouble. The prevailing wisdom of the time held that IBM‘s core mainframe business was headed for obsolescence. Then everything changed when Louis V. Gerstner Jr. was brought on as chairman and CEO. Realizing that IBM’s lifetime employment practice was negatively affecting performance, Gerstner oversaw a massive overhaul that saw thetechnology firm taking an $8.9 million charge to slash 60,000 workers.
From 1993 to Gerstner’s retirement in 2002, IBM‘s market capitalization rose from $29 billion to $168 billion. Gerstner was hailed as one of the great CEOs of the end of the 20th Century and is said to have saved IBM $4 billion a year through its workforce reduction and cost cuts.