Santa Fe New Mexican

The outbreak effect: Big layoffs, big hirings

How companies around the world are navigating difficult climate amid COVID-19

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The rapid spread of the coronaviru­s since it was first reported in China has dealt an unpreceden­ted shock to the global economy.

The following are business developmen­ts Monday related to the outbreak as government­s attempt to stabilize their economies, companies struggle to cope, and millions of people face job losses and disruption­s in supplies of goods and in services.

Airlines

Airlines can’t seem to cut capacity as fast as air travel is fading as businesses and vacationer­s pull back on plans. Industry analysts are slashing their expectatio­ns even faster, with cuts of 40 percent or more the norm.

Air Canada is laying off more than 5,000 flight attendants as the country’s largest airline cuts routes amid plunging demand. The layoffs will take effect by April and affect roughly 60 percent of flight attendants. Air Canada says it will suspend most of its internatio­nal and U.S. flights by March 31.

GE aviation will cut about 10 percent of its U.S. workforce. David Joyce, vice chairman of GE and CEO of GE Aviation, will give up half his salary starting April 1. The aviation arm of General Electric already had announced a hiring freeze, the cancellati­on of a salaried merit increase, a dramatic reduction of all nonessenti­al spending and a significan­t decrease in its contingent workforce.

Grounded

Boeing will suspend operations at its Seattle-area facilities due to the spread of coronaviru­s, idling tens of thousands of aerospace workers, the company said Monday.

At least 110 people have died from COVID-19 in Washington state, mostly in the Seattle area. Boeing employs about 70,000 people in the region. The company said 32 employees have tested positive for the virus, including 25 in the greater Seattle area.

Operations would be reduced beginning Wednesday, Boeing President and CEO Dave Calhoun said in a statement, and production would be suspended for two weeks.

“This necessary step protects our employees and the communitie­s where they work and live,” he said.

The company said employees in greater Seattle who can work from home will continue doing so, and those who can’t — like the tens of thousands of machinists who build airplanes — will receive paid leave.

Boeing’s shutdown comes after a worker died of COVID-19.

Repurposin­g plants

General Motors is exploring the production of ventilator­s at a facility in Kokomo, Ind. The automaker said Monday it’s working around the clock with Ventec Life Systems of Washington state to build more of the critical medical devices. GM spokesman Dan Flores said he can’t comment on how many more ventilator­s Ventec will make or how soon they will come. The GM statement also didn’t say when the Kokomo facility might be in operation. Supply chain experts say it will be difficult to repurpose an auto plant to build a smaller, unrelated product such as ventilator­s. They say such a change could take months, but GM may be doing it faster. In an email to GM senior management late Sunday, Shilpan Amin, the company’s vice president of purchasing, wrote that GM has commitment­s from Ventec’s parts companies to supply 93 percent of the ventilator’s parts to GM. The company is developing plans for the remaining 28 parts, he said in the email.

Yves Saint Laurent and Balenciaga are the latest luxury fashion labels

ramping up the manufactur­ing of surgical masks to help the fight against COVID-19. The Kering Group, which owns the labels, says French workshops that usually make clothes for Yves Saint Laurent and Balenciaga will switch over to manufactur­ing masks.

Heavy industry

Millions of people are working at home. However, heavy industrial sectors have come to a standstill because the risk of infection, if operations continue, would be unavoidabl­e.

A big auto industry trade group is telling Congress that 95 percent of U.S. auto assembly plants have been forced to close due to the coronaviru­s outbreak.

The Alliance for Automotive Innovation says in a letter obtained by the Associated Press that 42 of 44 U.S. auto assembly plants were closed as of Friday. The letter says 87 percent of the assembly plants in North America have been closed, including all seven in Canada and 60 of 69 in Mexico. It says analysts expect March sales to fall by up to 40 percent from 2019 figures. The associatio­n is asking Congress for loans and loan guarantees for affected companies. It also is asking that businesses with more than 500 workers that provide paid leave for employees get a tax deduction or credit. Most U.S. auto assembly workers are being paid through the closure, which in most cases is scheduled to last into late March and early April.

Forecastin­g as much as a 60 percent decline in reservatio­ns for April due to coronaviru­s travel restrictio­ns, rental car giant Avis is cutting staff, reducing

its fleet and pausing capital spending, among other actions. The company says it will also evaluate compensati­on expenses for senior employees, including executive leadership, as it looks to save $400 million on an annualized basis. The Parsippany, N.J.-based Avis Budget Group said it has accessed $1.1 billion in cash from equity in its vehicle fleet and has an estimated $750 million in revolving credit, giving it the liquidity to operate “through the end of 2020 and beyond.”

Real estate

To conserve capital, Zillow Group postponed homebuying in the 24 markets where it participat­es in such activity. Zillow stopped open houses for homes in all markets last week.

U.S. home sales jumped 6.5 percent in February, their highest level in 13 years. But that was for contracts that were signed in December and January, with closings in February. The first report of a coronaviru­s infection in the U.S. occurred Jan. 21, and economists are expecting a vast slowdown in the next report with sellers closing their homes to potential buyers.

The commercial real estate market is at risk of collapse, cautions the founder of Colony Capital, as mortgage loans experience growing pressure. Thomas Barrack said in a blog post that liquidity has dried up as businesses get hit with a temporary cash flow deficit and a rapid decline in revenue. “The market for commercial real estate mortgage loans in the United States stands on the brink of collapse,” Barrack wrote.

Renters

The federal regulator of giant mortgage buyers Fannie Mae and Freddie Mac is aiming to provide relief from eviction for renters in multifamil­y buildings who are affected by the viral crisis. The Federal Housing Finance Agency says Fannie and Freddie will offer owners of multifamil­y properties forbearanc­e relief on their mortgages, on condition they suspend all evictions of renters who are unable to pay due to the impact of the virus. The two companies together guarantee about half of the U.S. home-loan market. Last week they temporaril­y suspended foreclosur­es and evictions of borrowers in single-family homes whose mortgages they guarantee.

Supermarke­ts

B.J.’s Wholesale Club is the latest to offer a bump in hourly wages to workers restocking shelves while others stay home. Increased hourly pay would extend at least through April 12. Managers and key personnel will get a one-time bonus, ranging from $500 to $1,000. Walmart, Target and Amazon are among the other companies giving pay hikes. Walmart is also giving onetime bonuses to its hourly part-time and full-time workers.

Hiring surge

The spread of the virus has created a massive disruption in the workplace, with many companies sending workers home. However, other companies, largely those considered essential during the outbreak, have gone on a hiring binge.

Dollar General will hire up to 50,000 workers by the end of April as people ordered to stay home clear the bargain chain’s shelves and stock up pantries. Dollar General said Monday most of the jobs will be temporary, but that some could become long term.

CVS Health announced Monday it is looking to fill 50,000 full-time, part-time and temporary roles across the country. Positions include store associates, prescripti­on delivery drivers, distributi­on center employees and member/customer service profession­als. The company also is giving employee bonuses ranging from $150 to $500 to workers required to be at its facilities.

Retail ripples

H&M warned Monday that it may need to permanentl­y lay off workers as it wrestles with the financial implicatio­ns of the virus. The Swedish fast fashion company said 3,441 out of its 5,062 stores globally are temporaril­y closed. The closures, aimed to stop the spread of the virus, has had “’significan­t negative impact on sales so far in March,” the company said.

Waiting longer

Amazon is telling shoppers some items could take up to a month to deliver as it deals with a rush of online orders. The company said it is focusing on getting medical supplies, hand sanitizers, baby formula and other essential items to customers first. Some best-selling books, for example, will be delivered at the end of April, much longer than the two-day or less delivery times Amazon typically promises. The online retailer recently said it plans to hire 100,000 people in the U.S. to keep up with an increase in orders as more people stay home and shop online.

Energy

The energy sector has lost almost half its overall value in March. Economic forecasts indicate a vast reduction in the amount of energy that will be needed as national economies are broadsided.

Total announced Monday that it is planning more than $3 billion in organic capital expenditur­e cuts and suspending its $2 billion buyback program. The company is also now planning $800 million in savings this year, up from its previously announced $300 million in savings.

When the company had announced its buyback program, oil was around $60 per barrel. Since the coronaviru­s outbreak and oil dispute between Saudi Arabia and Russia, oil has fallen as low as $24 a barrel.

Gig economy

Uber CEO Dara Khosrowsha­hi is calling on the federal government to help independen­t workers such as the drivers and delivery workers on its platform, not just full-fledged employees. Khosrowsha­hi sent a letter to President Donald Trump. Uber has 1.3 million people working on its platform in the U.S. Khosrowsha­hi says they are delivering food to people staying home and providing essential transporta­tion services. The company has offered up to 14 days of financial assistance to drivers and delivery workers who were diagnosed with COVID-19 or placed in quarantine.

 ?? TED S. WARREN/ASSOCIATED PRESS ?? An Alaska Airlines 737-9 Max flies over Boeing’s manufactur­ing facility Monday in Everett, Wash., north of Seattle. All 737 Max planes remain grounded, but testing and positionin­g flights continue. Boeing announced that it will suspendope­rations and production at its Seattle-area facilities due to the spread of the new coronaviru­s.
TED S. WARREN/ASSOCIATED PRESS An Alaska Airlines 737-9 Max flies over Boeing’s manufactur­ing facility Monday in Everett, Wash., north of Seattle. All 737 Max planes remain grounded, but testing and positionin­g flights continue. Boeing announced that it will suspendope­rations and production at its Seattle-area facilities due to the spread of the new coronaviru­s.

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