Report: Telecom job cuts in US continue to rise

Job cuts in the telecommunications industry continue to soar, indicating that more trouble lies ahead for telecommunications firms, according to outplacement firm Challenger, Gray & Christmas.

Already this year, the telecommunications industry has announced 60,691 planned job cuts, 42 percent ahead of the pace set in the first two months of last year, according to the Chicago-based firm.

Challenger's report comes on the heels of earnings warnings from Lucent Technologies Inc. in Murray Hill, N.J., (see story) and Nortel Networks Corp. in Brampton, Ontario.

According to Challenger, the telecommunications job cuts represent a sizeable 71 percent of the 85,101 cuts announced this year in the technology sector, which also includes computers, electronics and e-commerce. In the first two months of 2001, telecommunications job cuts totaled 42,879, or 48 percent of the 89,328 technology cuts announced at that time.

Challenger said the electronics industry, which is tied heavily to the telecommunications sector, has also seen an increase in job-cut announcements. In the first two months of this year, electronics companies announced 11,728 cuts, a third more than the 8,894 announced in the same period last year.

The company said that overcapacity, a glut of competitors and a lack of capital spending by companies on new networking and telecommunications equipment are all taking their toll on even the strongest companies.

According to Challenger, the only areas where job cuts have slowed are the e-commerce and computer sectors. The biggest decline in cuts has been among dot-com companies, the outplacement firm said.

Job-cut announcements by those companies fell 94 percent from 21,383 during the first two months of 2001 to just 1,277 so far this year. Computer companies are also cutting fewer jobs -- 11,405 planned cuts have so far been announced this year, down 30 percent from the 16,242 announced at this point last year.

Challenger said falling job cuts in these areas don't necessarily mean that the economy is looking up. The company said the slowdown in cuts is probably more indicative of the fact that the firms that have survived are likely operating with a bare-bones staff and can't afford to eliminate any more jobs.

"The fact that these areas are not creating jobs gives a more accurate picture of these sectors," said company CEO John Challenger.

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