Job losses - Industry- 2008 & 2009

by varun sahay | February 12, 2009 at 06:08 am

1329 views | 2 Recommendations | 1 comment

Companies focus on Operating Free Cash Flow in times of Uncertainty

Companies citing decline in orders, no lines of credit, debt becoming non existent or more expensive, weaker demand, rapidly deteriorating global economy, and plunging commodity prices, BRIC countries reducing demand and the US financial crisis.

Companies should have three core focus areas for 2009 -2012. These focus areas should be save cash, restructure into leaner companies to be profitable at lower sales level, and lastly to innovate new products to enhance their growth opportunities.

2009 has literally been a year of change and companies worldwide are all streamlining their business models. Being operation driven or sales driven or innovation driven was the mantra starting after the burst of the internet bubble. Now the mantra is simple “create operating free cash flow”. The first step companies are taking before taking the axe to its employees is reducing inventory, delaying the account payables and obliging creditors to pay account receivable sooner. The complete supply chain is affected by this destocking impact leading to a more stable demand and supply module being created improving the operating working capital requirements hence improving the earnings by reducing the operating expenses.

Operating free cash flow comprises of EBITDA+ OWCR-CAPEX. EBITDA is the earnings before interest, taxes, depreciation and amortization on the profit and loss statement and depicts the operational earnings of the company. OWCR is operating working capital requirements and this includes the account receivables from customers, plus the inventory which includes finished goods, work in progress and spare parts, minus the account payables to suppliers found in the balance sheet and to employees. CAPEX is the capital expenditure that the company plans on spending in the coming year. Taking the three components together we can check to see how much cash the company is creating in a given quarter or year and also measure the cash generation capability of a company.

Having said this companies are reducing inventories by stopping production, delaying account payables to suppliers from an average of 30 days to 60 days and also by reducing head count.

Is this the FAT that companies had accumulated during booming 2006 and 2007 or is this lean industries reducing headcounts as they have good knowledge retention programs?

A look at a list of companies that have downsized in 2008 and 2009.

Alphabetically Listed:

Company 2008 2009 Industry Abbott lab 200 healthcare ABC 400 Entertainment Adobe Systems 600 software Akami 110 software Alcoa 15200 13500 Aluminium Allastate Corp 1000 Insurance Am Airlines 7000 airlines AM EX 7000 credit cards AMD 500 1100 chips Amonil 389 chemical company Anglo Platinum 10000 platinum producer AOL 700 internet ArcelorMittal 9000 Steel AstraZeneca 15000 Pharma AT&T 12000 12000 telecommunication AutoDesk 750 design software Bank AM 43428 bank Barclays 500 5000 bank Barnes and Nobles 100 Books Bell Canada 1500 telecommunications Bennigans Restaurent 9300 catering Best buy 500 Retailer consumer electronics BHP Billiton 6000 mining co. Black & Decker 1200 tools Boeing 800 10000 aerospace Bon Ton stores 1150 Department stores BT 10000 telecommunications Burburry 500 luxury house Caterpillar 20000 heavy machinery Cessna 4600 Aerospace Chrysler 1825 auto Cigna 1100 Insurance Circuit city 7305 30000 electronics Cisco 3000 hardware Citi 59000 bank Clariant 1000 chemical company Clear Channel Communications 1850 radio stations & outdoor advertising ConocoPillips 1350 oil corning 4900 glass & ceramics Corus 3500 Steel Credit Suisse 5300 bank Cummins 800 Diesel engine manufacture Daimler Trucks 2100 auto De Beers 1000 diamonds Dell 8900 computers DHL 9500 POST DOW Chemicals 5000 chemical company Eastman Kodak 4500 Electronics Emc Corp 2400 data storage Ericsson 5000 mobile Estee Lauder 2000 Beauty Ethan Allen 350 Home furnishing co. Fidelity investments 4000 bank Ford Motor Credit 1200 finance Freescale 4800 chips GE Capital 11000 finance GKN 1400 Aerospace Glaxo Smith Kline 10000 pharma GM 19000 10000 auto GMAC 5000 auto finance Goldman Sachs 4760 bank Google 6000 100 internet Harley Davidson 1100 Motorcycles Hertz 4000 auto Hitachi 7000 Electronics Home Depot 7000 Home furnishing co. Honda 3100 auto HP EDS 24500 computers HSBC 2450 bank Hudson Bay Co. 1000 trading co. Huntington Bancshares 400 Bank IBM 2800 hardware ING 7000 Bank Intel 6000 chips International paper 1500 paper Jabil Circuit 3000 Electronics John Deere 200 heavy machinery JP Morgan 18360 bank KBG Toys 15000 toys Kodak 4500 electronics Lazard 244 bank Lehman bro 18900 bank Lenova 1250 2500 computers Level 3 Communications 450 fibre based communications Linen n things 21250 linen distributor Liz Claiborne 725 Beauty Lockheed Martin 850 aerospace Logitech 525 Electronics Macys 960 7000 department stores Magneti Mareli 800 automotive components MeadWestvaco Corp 2000 Paper Merrill Lynch 5650 bank Metro 15000 Retailer Michelin Canada 95 tyres Microsoft 5000 Business Software maker Morgan Stanley 4100 1880 bank motorola 4000 Mobile NASA 7000 SPACE NEC 20000 Electronics Neiman Marcus Group 375 luxury house New York & Co 350 Specialty apparel retailer nissan 1200 20000 auto Nokia 2950 telecommunications Nortel 2100 telecommunications Nova Chemicals 400 plastic producer NVIDIA 360 graphic processing units OshKosh 1050 Fire engines builder Palm 200 palm Panasonic 15000 electronics Pepsi co 3300 food & bev Pfizer 19500 Pharma Phillips Electronics 6000 Electronics Pioneer 10000 Electronics PNC fin 5800 Brokerage RBS 10000 2300 Bank Reliance group 5000 conglomerate Rio Tinto 14000 mining co. Rockwell Collins 600 Aerospace sainsbury 200 Department stores Saks Fifth Avenue 1100 Department stores Sanyo 1200 Electronics SAP 3000 Business Software maker Schlumberger 1000 technoly supplier to Oil Ind Schwab 600 Brokerage Seagate Technology 2950 computer disk drives Siemens 3800 conglomerate Sony 8000 16000 electronics Sprint Nextel 4000 8000 telecommunications Starbucks 12000 6700 coffee retailer Sun Microsystems 6000 1300 hardware Target 1000 discounter tdk corp 8000 Electronics Texas Instruments 650 3400 chips Time Warner 700 Entertainment Toshiba 4500 electronics Ulster Bank 750 Bank Un. Texas 3800 university