The A.V. Club, an entertainment supplement to the satirical weekly newspaper The Onion, runs a regular feature on its website called "Friday Buzzkills," enumerating the various terrible and depressing things that have happened that week. Lately, though, any weekly report that touches on the economy, as this column does from timeot;> to time, has come to seem like a Friday Buzzkills homage. Let's get to it, then: here's your catastrophe watch for mid-December.
Bailout fever
Bailouts are the hot new thing, it seems, and no country wants to be left out. Congress laid a speed bump in front of the auto industry aid package on Thursday, but bailouts continue to crop up in other sectors. The government of Taiwan announced it has a plan to bail out manufacturers in its huge memory-chip industry, which is suffering from high manufacturing costs, overproduction, and plummeting prices for the DRAM chips used in computers. Details of the plan have not been disclosed.
China's Ministry of Economic Affairs is working with the endangered chip industry on a plan to shore it up while the individual companies figure out what to do. Production and wage cuts are the likely first steps toward a turnaround. Many Taiwanese companies, unlike their American counterparts, are loath to resort to layoffs in order to reduce their costs. Still, consolidation will have to happen, and that will no doubt result in some job loss as companies integrate any acquisitions that might occur.
Meanwhile, the German and South Korean governments are mulling bailouts of DRAM manufacturers in their countries as well.
Leveling down
As the economy contracts, consumers are spending less on things that aren't necessities. The gaming industry has felt this particularly hard.
Last week, Electronic Arts revised downward its guidance on earnings for the year, warning that both sales and earnings figures would be significantly lower than had been previously projected. With money tight everywhere, retailers are concentrating their spending on the most popular games, which, other than the great "Madden NFL," don't happen to come from Electronic Arts this year. Many stores have winnowed their inventories down to just the bestsellers, and a lot of EA's current titles suddenly can't find their way into shops.
EA said it plans to follow the lead of its customers, cutting the number of games it makes and concentrating its efforts on the titles that have the most potential, based on company surveys.
Further layoffs in tech
Sony recently announced its plans to cut 8,000 full-time jobs worldwide, and eliminate another 8,000 part-time and temporary workers. The company will cut back on factory development and supply-chain costs as well. Many of the lost jobs will be in Asia. Sony reported a 72 per cent drop in earnings in the third quarter of 2008 (its fiscal second quarter), to a mere $213.6 million.
Elsewhere, French telco hardware manufacturer Alcatel-Lucent announced plans to cut 1,000 managers and up to 5,000 contract employees. Alcatel has lost money the last two years, and expects to do so again this year. These latest moves are being made in the hopes of at least breaking even in 2009.
Closer to home, job cuts at Yahoo!, after weeks of heavy telegraphing, began to kick in. The bounced employees, whose work ends now, will be kept on the payroll through February 13. They, like we and like everyone else, are surely looking forward to the day the economic slide gets arrested.
