Telecom Job Losses in 2002 Could Top Last Year's

Last year may have been bad for job losses in the U.S. telecommunications industry, but this year is shaping up as even worse, according to a new study.

The 165,840 job cuts announced in the U.S. telecom sector through June of this year are 27 percent higher than the 130,422 announced in the first half of 2001. The final tally will likely match or exceed last year's record figure of 317,777, according to Chicago-based Challenger, Gray & Christmas Inc.

"Telecommunications continues to surprise us month after month with significant job-cut numbers," Challenger Chief Executive John Challenger said in a statement released Monday. "The fact that telecom downsizing is on track to beat last year's total really tells where this industry is headed.

"Not only are the companies having trouble selling their goods and services, there is now the added element of questionable accounting, WorldCom (WCOM) being just the most recent example," he added. "This path of self-destruction will not help matters and we could eventually see the industry implode on itself."

WorldCom Inc., the No. 2 U.S. long-distance telephone and data services company, has been accused of violating securities laws by covering up $1.22 billion in losses by improperly booking $3.85 billion in expenses.

Overall, technology-related industries, including the computer, electronics and e-commerce industries, have announced 243,200 job cuts through June of this year, or one third of the total for all U.S. industries, according to Challenger. However, the tech sector total this year is 23 percent lower than those announced in the first six months of last year.

The tech industries announced a total of 695,581 job cuts in all of last year, or 36 percent of the total cuts announced by all U.S. industries, Challenger said.

The telecom sector also represented nearly one of every four of the 735,527 job cuts announced in all U.S. industries through June, according to Challenger. That is the highest rate by any industry since the outplacement firm started tracking job cuts in 1993.

While telecom job cuts are on the rise, other tech-related industries have declined from a year ago, Challenger said.

The computer industry saw its announced cuts in the first six months finish almost 26 percent below last year, although it did see a dramatic increase in the second quarter as 42,186 cuts were announced, up from 13,212 in the first quarter.

The biggest decline in the tech sector was the e-commerce category, where fewer than 2,000 job cuts were announced through the first half of 2002, compared with almost 50,000 in the same period last year, according to Challenger. Electronics saw its announced job cuts decline to slightly more than 20,000 in the first half from more than 59,000 last year.

Challenger said the high-tech job cuts are likely to continue for the balance of the year, with no turnaround for telecom in sight. He added that it now appears computer job cuts also are on the rise as personal computer sales fall due to more cautious consumers and business clients.