Boeing is the Tip of the Layoff Iceberg

Mish

Boeing announced more layoffs after recording zero orders but 108 cancellations.

Boeing announced over 12,000 Layoffs in the wake of plane cancellations and dearth of new orders.

Boeing Co (BA.N) said Wednesday it was eliminating more than 12,000 U.S. jobs, including involuntary layoffs of 6,770 U.S. workers as the largest American planemaker restructures in the face of the coronavirus pandemic.

The job cuts include more than 9,800 employees in Washington State. Boeing said Wednesday the “several thousand remaining layoffs will come in additional tranches over the next few months.”

Boeing Chief Executive Dave Calhoun told employees in an email the “pandemic’s devastating impact on the airline industry means a deep cut in the number of commercial jets and services our customers will need over the next few years, which in turn means fewer jobs on our lines and in our offices. ... I wish there were some other way.”

Boeing expects 737 Max deliveries will start in the third quarter but it does not expect FAA approval until August.

Let's move beyond airlines for a look at what's happening.

Sorry We're Closed 

Sorry We're Closed

Challenger and Gray reports Retail Announces 114,327 Job Cuts, Most on Record, as More Stores File Bankruptcy.

Retailer Pier 1 Imports announced it would close all remaining 540 stores and try to find a buyer for its online business. It follows bankruptcy announcements from JC Penney, J. Crew, and Neiman Marcus.

Retailers have announced 114,327 job cuts through April in 2020, not only the highest January-April total, but also the highest annual total on record. It shatters the previous high of 100,518 cuts announced by Retailers in all of 2003.

Announced Retail Job Cuts Through April 2020

Announced Retail Job Cuts Through April 2020

Lost and Gone Forever

This time, most of these jobs are lost and gone for years, if not forever.

Malls in general are dying. 

9,300 stores closed in 2019, breaking the record of 8,000 store closures in 2018. According to Coresight Research, another 15,000 stores could close in 2020.

Fed Can Print Money But It Cannot Print Jobs

That's a nice saying but I did not come up with it. I can find at least three instances dating back to 2010.

Don't Worry, the Fed has Belts and Suspenders

One Belt and Multiple Suspenders

However, I can claim a sarcastic Don't Worry, the Fed has Belts and Suspenders

Unfortunately, all the Fed is doing is creating zombie corporations unable to survive expect with permanently low interest rates. 

Grim Economic Data

  1. May 8: Over 20 Million Jobs Lost As Unemployment Rises Most In History
  2. May 15: Retail Sales Plunge Way More Than Expected
  3. May 15: Industrial Production Declines Most in 101 Years
  4. May 15: GDPNow Forecasts the Economy Shrank by a Record 42%. It's 41.9% as of May 19.

Ripple Impacts May Last Years

The economic data has been grim and the ripple impacts may last for years.

Global COVID-19 Risk Ranges Up to $82 Trillion

To understand the total global risk, please see Global COVID-19 Risk Ranges Up to $82 Trillion

Ripple Impacts 

For a detailed synopsis of the state of the economy and the ripple impacts, please see The Economy Will Not Soon Return to Normal: Here's Why.

Anyone who expects a fast recovery out of this mess is delusional.

Mish

Comments (61)
No. 1-19
Zardoz
Zardoz

Are we on the right side of the V shaped recovery yet?

tokidoki
tokidoki

TikTok is hiring 40K people globally. Why make airplanes if you can make dance videos.

Mish should also join TikTok.

IA Hawkeye in SoCal
IA Hawkeye in SoCal

I worked at Boeing El Segundo for 2 years. They are known for ramping up and then laying everybody off, been doing it for decades. I don't know if Boeing is a accurate barometer.

I do see that gas prices and traffic are picking back up. Not like February but much more than April!

Mish, I'm only going off common sense here but that dictates that some jobs are going to snap back immediately, like dentists, hair salons, etc. Others will be on PPP until they decide in August if there are enough bodies present to justify employment levels. Does that predict more of a wavy recovery, than a letter shape?

I pay close attention to Vegas, I have friends and family there and I happen to have a buddy going June 4th, opening day. The city has said they will not have all the "bells and whistles" up in June, however bookings in the 3rd and 4th quarter are still strong. I am employed, I'm a comped Mlife member, and I will be there sometime this year. I imagine many others will too, people love enjoying themselves!

Zardoz
Zardoz

Maybe it'll be fun, maybe it'll be:

"And one by one dropped the revelers in the blood-bedewed halls of their revel"

We shall see...

STF
STF

@Mish , If you are an investor, which I believe the reason most of us are here... What do you do? Stock market is about to hit all time highs due to Fed intervention. So what gives? Does any of this analysis matter?

Blurtman
Blurtman

Nikki Haley was on the board of Boeing when they were cutting corners designing crashable airplanes. OTOH, Saudi Arabia put in a larger order for the planes, where crashability was a desired feature. Go figure.

CCR
CCR

People love to shop and eat out. Landscape is changing, but people love to shop. Great time to get a low cost lease. Time to dust off my smoothie shop business plan.

You can sit and be scared or realize that opportunity is everywhere.

RonJ
RonJ

The tip of the iceberg passed some time ago. At last count it was what, 38 million?

channelstuffing
channelstuffing

Central Banks realized they could not continue the charade any longer,so they decided to basically put the entire planet in defacto Chpt 11 so this Corona bs was hatched to use as cover/excuse call it what you will,bottom line CB's and politicians put the whole in bankruptcy so they can buy everything on the cheap,including you guessed it.....Boing!

gregggg
gregggg

Well if Delta is scrapping 18 of their Boeing 777 fleet early, that ought to tell you something about new aircraft sales.

anoop
anoop

How does one of the most iconic and respected names in America end up like this? Is this because of what they teach in B-school?

Anda
Anda

In Spain a car plant in Barcelona is closing , a live stream of demonstrations there for whatever it is worth...

Herkie
Herkie

American Airlines plans 30% reduction of management, administrative staff...

But, since the workforce would rather just claim those enhanced benefits....

Fed finds new challenge for the economy: Workers who don’t want to come back to their jobs

Who could not see this coming? https://www.cnbc.com/2020/05/27/fed-beige-book-many-workers-dont-want-to-come-back-to-their-jobs.html

They cited safety concerns, child care issues and the generous unemployment benefits the government has been providing.

frozeninthenorth
frozeninthenorth

Has anyone notices that the markets are doing "great" S&P500 is only 10% off its all time high. I think that sure unemployment is trough the roof, that companies are shutting down, but really all that counts is that the market is doing great. I bet you that after the 12,000 layoffs Boeing stock will rise.

Five bucks that Trump will soon announce that everything is all right because the S&P500 is back to its March level -- its all, all right! (massive sarcasm)

MiTurn
MiTurn

Hmm, I wonder about Boeing's pension system.

Misgivings
Misgivings

Apparently there are a lot of delusionists out there. What else explains the run up in the stock market?

Tony Bennett
Tony Bennett

"Boeing is the Tip of the Layoff Iceberg"

...

Yes.

Advance Durable Goods Report out this morning. Ugly as expected, but real action in the revisions. SIGNIFICANT negative revision for March, but also January and February ... as in pre covid.

Bam_Man
Bam_Man

"Just the tip."

JustDaFactsJack
JustDaFactsJack

Air travel is down over 80%. Even if it moves to double the present levels, all the major US carriers will go bankrupt, and there will be an avalanche of parked, for-sale, recent-model planes at fire sale prices.


Global Economics

FEATURED
COMMUNITY