Greg de la Cruz works at NCR Corp's R&D center in the Philippines. He is interested in economic history and current world financial affairs.
Large Company Layoffs in the 2000s
If there has been one constant in corporate work culture, it’s mass layoffs. Bonuses, stock options, promotions, org restructuring—these have been constant, too, but let’s not turn a blind eye to the fact that large organizations are notorious for letting hundreds, even thousands of people go. And for various reasons such as cost-cutting, getting bought out, mergers, dissolution (going out of business), reorganization, “streamlining” (to use the most annoying corporate buzzword), etc.
In 2021, the CEO of what LinkedIn awarded as the No. 1 startup for back-to-back years (2020 and 2021), Better.com, laid off 900 employees over a Zoom call. We saw how Uber did the same thing the year prior but to 3,500 employees. Announcing mass layoffs over a video call seems to be the most cost-effective and time-saving manner to do so—and it also prevents any type of violence from breaking out, especially towards the messenger and inside the office space, if some workers happen to hear the news there.
Everything about layoffs is awful. And if there’s any silver lining to getting laid off, it’s probably the employee’s realization and acceptance that these things really do happen. They happen more frequently than they might think and without their control. Furthermore, it’s important to know that no company—not even any of the most established ones—has been safe from carrying out mass layoffs, which is why I compiled this list of 10 mass layoffs in the 2000s that you should know about.
1. Tesla (2018)
There’s no better way to start a list of recent mass layoffs than to open it with a company that reached a trillion dollars in market capitalization, and at the same time, is led by the richest man in the world. Three years ago, Tesla laid off 9 percent of its workforce, leaving more than 3,000 people jobless. The reason for the mass layoffs was “company-wide restructuring,” and thank God they didn’t use the word streamlining.
Did it all work out for the better? Now that Tesla is one of the most valuable companies in the world, and its CEO is the wealthiest man alive, then maybe you could say it all worked out in the end—for the company, at least. The company did what was good for the company, which is what you, as a worker, should always keep in mind when you work for a large company (regardless of how valuable, stable, or awesome that company is). Employees, while they ultimately add value to the company, are, at the end of the day, a cost that the latter can reduce at any time and in any situation.
2. JP Morgan (2014)
It was very important for me to include, especially at the top of this list, companies that were known globally and belonged to the top tier, what one could claim as “too big to fail.” The biggest bank in the United States may be too big to fail with a market cap of half a trillion dollars and assets of over 3 trillion dollars, but it, too, is not exempt from resorting to mass layoffs. In February 2014—and this was already six years after the Great Recession—JPMorgan Chase & Co. announced plans to lay off 8,000 workers.
Despite having healthy profit numbers (In 2014, it was $21.8 billion, a record), it laid off thousands of workers throughout bank branches due to lower demand in home loans, borne from high interest rates. And I may have said it the wrong way—the fact that it had record profit in 2014 was probably because it was able to reduce its costs quite well, which includes offloading the salaries of 8,000 workers.
This shows you that even when a company is doing well (and not really on the brink of some collapse), it will resort to tactics in order to do even better—making investors, shareholders, executives, and the CEO happier in the end. And leaving 8,000 individual people looking for their next job (where hopefully, they won’t get treated like garbage).
3. Microsoft (2009)
Investors love companies whose main line of business is providing software, mostly because of the low overhead and hence higher profit margin. Microsoft, since its inception by Bill Gates, has been known as the personal computer software provider of the world. The company was ahead of every other tech company during the dot-com boom, and it continues its success today, overtaking Apple to become the most valuable company in the world in Oct. 2021, attaining a market cap of $2.49 trillion.
Despite all its success, though, like the first two prominent, household-name companies on this list, it hasn’t been immune to doing mass layoffs. In January 2009, it started laying off 5,000 employees, of which 1,400 were reported to have been let go on the day of the announcement. The primary motivator was a drop in revenues (of what was expected). In the preceding quarter, it actually experienced a 2-percent increase, but it was $900 million lower than it had expected its revenues to be.
This brings me back to my earlier comment—despite doing well, a company will try to do even better. The cutbacks were to eliminate $1.5 billion in operating costs—and all for what? For more bonuses to be given out to executives? To use the profit to invest in technologies in order to stay ahead of the competition? Whatever the reason may have been to save the $1.5 billion, the more important metric would be the 5,000 people who lost their livelihood.
4. WeWork (2021)
There was a massive letting-go of workers at WeWork in 2021. Not that it wasn’t expected—ever since former CEO Adam Neumann fell from grace in 2020 when WeWork botched its IPO, cutbacks were coming. WeWork cut two-thirds of its staff, or roughly 8,300 people. Startups are known for splurging on the hiring of talent (and shortly afterward trimming down, especially if about to go public). The pandemic was not very friendly to the co-working space industry, of which WeWork had the largest market share for some time.
All the same, layoffs are not pretty at all, even if they are somewhat expected to happen. For a company that wanted to be in better financial health, it made sense for them to really trim down operating costs. But then, on the other side of that—the unseen side—are 8,000-plus people losing their jobs and possibly never trusting startups or charismatic CEOs ever again.
5. General Motors (2018)
For a company that has existed for more than a century, you’d assume that it had figured out how not to fire many people all at once. But such is not the case for the second car company on this list, General Motors. Companies that operate manufacturing plants and who are highly dependent on market demand for the scale and volume of their output are very prone to doing mass layoffs. In November 2018, General Motors announced that it would start laying off 18,000 workers, and by February 2019, it started letting go of 4,300 white-collar jobs.
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Just because a company has been around for so long doesn’t mean it has everything figured out. What has been constant throughout decades of economic upheavals—booms and busts—has been uncertainty itself. Companies will react to the times, and they will do anything in their power to stay whole or survive. For a company that had been around for 110 years, General Motors did not have it all figured out. But it is still standing.
6. Amazon (2001)
Amazon was still seven years of age at the time and still fell within the definition of a startup. It was still mainly called Amazon.com, the dot-com portion of the company reminding you that this was during the age of the internet bubble and eventual bust. In 2001, Amazon.com laid off 1,300 workers and in the same year, it was the first time it ever turned a profit.
Amazon today, as is common knowledge, is one of the richest companies in the world and known as the largest employer in the world. Its founder and recently ‘retired’ CEO held the title of richest person in the world for quite some time and was the one who overthrew Bill Gates, who held the title for more than two decades.
The Amazon.com company back in 2001 is almost completely indistinguishable from the company it is today, and the reason it let go of 1,300 workers was in fact in order to achieve profitability. The company was in debt of $2 billion, and there were questions on whether it was going to end up being a viable business someday.
Fast forward 20 years, and it now posts an annual revenue of $380 billion—more than 100 times its revenue back in 2001. Whatever it did back in 2001, however painful it was, it seemed to help set them up for success, as it now employs 1,000 times as many workers as it let go back then. Were the layoffs a good thing after all?
7. Pfizer (2007)
The pharmaceutical giant that gave us the first Covid-19 vaccine also did its own layoffs back in 2007. This was a little bit before the Great Recession began and roughly a year prior to Lehman Brothers declaring bankruptcy. It was a mass layoff of monumental scale—cutting 10,000 jobs. It’s worth noting that Pfizer had already been around for more than 150 years, plus you probably wouldn’t expect a company that was selling medicine to ever struggle financially.
The problem was what was called a “patent black hole” where, because of expiring patents, it would lose sales. The job cuts were an effort to save $2 billion—and you might think that a company expecting patents to expire (with definite expiration dates) would have known how to prepare for such an occasion and not resort to offloading people to save on expenses.
8. Pepsi (2012)
Another example of mass layoffs that nearly reached the 10,000 mark—the Pepsi layoffs, which began in 2012 were done to save on money. And the layoffs were done despite having experienced an 8-percent annual growth in earnings per share over the last five years. The layoffs were yet again another slap in the face to the people who worked in factories, the supply chain, and wherever among Pepsi’s workplaces. The earnings in those five years preceding gave shareholders $30 billion in the form of dividends and share repurchases.
Would you still be surprised why people mistrust corporations so much?
9. Hewlett-Packard (2012)
If Facebook, Apple, Amazon, Netflix, and Google (FAANG) are the dream companies to work for today, you could argue that Hewlett-Packard (HP) was one of the notable companies in its time to have the prestige of a FAANG company. In Walter Isaacson’s biography of Steve Jobs, it was the dream job for anyone who wanted to work in tech, which included Steve Jobs himself, who worked a summer job in its factory.
As time-tested as HP is as a company, it was not exempt from resorting to mass layoffs to save money. Despite being the world’s largest maker of computers and servers, in 2012, it announced that it would be cutting 27,000 jobs which accounted for 8 percent of its total workforce.
What’s even sadder with HP was that laying people off wasn’t a novel idea. Since 2005, it had laid off 75,000 people. Obviously, one can’t label HP as a place where you’ll “work your dream job” anymore—because who knows if you’ll still even have that job one or two years later?
HP’s reasons for letting people go have been the same old corporate cringe-worthy lines of “investing in future development” and “significant improvements in efficiency and customer service.” As if one couldn’t run out of other ways to expand on the word streamlining.
10. Deloitte (2020)
Last but not the least, Deloitte. I had to put this company in here because I felt the need to include a company that aids other companies in doing mass layoffs. This is no accusation on the part of Deloitte, but it’s easy to infer that the top consulting firms in the world—Boston Consulting Group, McKinsey, Bain & Co., Deloitte, to name a few—had some hand in keeping the top companies in the world (which may or may not include the preceding nine companies on this list) as profitable as possible.
And what’s the most straightforward way to keep a company profitable? Cutting down costs. Not generating more revenue (because more revenue entails more expense), but reducing overhead.
I’m not qualified, nor do I know what goes on behind the closed doors of the conference room that holds a company’s top execs, its CFO, and almost always a representative from a top consulting firm. But I do know that companies and their execs obsess about every quarterly earnings report.
How does one end up with a bigger bottom line? How does one entice more investors? How do you keep the ones you already have wanting for more? I have an idea: let’s cut these thousands of jobs before the quarter ends and save billions of dollars. Then we can rehire those same jobs for cheaper next quarter!
Most of the preceding paragraph, of course, is hypothetical. What is not hypothetical was Deloitte letting go of 5,000 employees in 2020. And here was the rationale given by Deloitte spokesman Jonathan Grandal:
“In connection with our annual fiscal year-end financial planning and performance management processes, we are aligning our resources with our clients’ evolving needs.”
Again—streamlining. Said way, way fancier by Deloitte. You might think that Deloitte, with the rest of the world, suffered during the pandemic year of 2020. But no—it earned $1.4 billion in profit, and it surpassed the 50-billion-dollar mark in revenue in 2021.
Why People Don’t Trust Big Corporations
How can big corporations regain the trust of employees, especially those who have been in the labor force long enough to know that mass layoffs are inside the ordinary? Mass layoffs create mistrust because they’re akin to an apocalyptic event, a calamity, that doesn’t distinguish between those who have been faithful and those who have not. And like natural calamities, often those in the lowest positions of the hierarchy bear the brunt, while those who are well-off are left unharmed with minor inconveniences as the worst-case scenario.
As great as your work performance might be, as stellar your attendance, your awards and accolades countless, even if your company erected a statue of you to celebrate your accomplishments—you are not immune to being laid off. And when a company lays people off, it also upsets those who were left behind. It might be survivor’s guilt or something else (it varies), but it all boils down to the loss of trust.
As Simon Sinek put it in one of his talks, when a company does layoffs, it sends the message that there’s no longer any meritocracy in the workplace. Because the people who were let go weren’t necessarily let go because of their job performance—they were just unlucky.
This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.