Job cuts slowed in tech sector? Industry has lost 437,000 jobs since 2001 - News - Industry Overview

Electronic News, Oct 14, 2002 by Tom Murphy

A newly released study indicates layoffs might be slowing down in the electronics industry. Now the question is whether the study is correct.

The reason for skepticism: The study is based on figures released when the second dip of this downturn took hold.

The unprecedented slump has forced the electronics industry to ax 437,000 jobs, or 8 percent of its workforce, since 2001, according to the American Electronics Association (AEA). The good news is that the number of layoffs per month seems to be trailing off.

There was a dramatic bloodletting of 113,000 jobs from the industry in the first half, but only 700 job cuts were made between May and June, the smallest monthly job loss since March 2001, according to the AEA study, "Special Midyear 2002 Tech Employment Report."

"Monthly technology employment trends indicate that the drop in industry employment might be slowing," said William Archey, president of the AEA, in a statement. "Nonetheless, the future remains uncertain."

Archey points out that the high-tech industry still employs 5.2 million people, which is off from its peak of 5.7 million in March 2001. Still, the industry's ranks have swelled from 4 million employees during its pre-boom years in the early 1990s.

"The companies in electronics manufacturing services have indicated that there are no new layoffs planned," said Scott Hudson, analyst for iSuppli Corp. of El Segundo, Calif. "But if we do indeed go into another recession, all bets are off."

Last week, sources told Electronic News that a new round of layoffs is coming for the semiconductor industry because the second half has been rife with reports of a deterioration in orders, anemic end-market demand and a mild, protracted recovery that may be pushed out until the second half of 2003.

On the same day that the AEA issued its report, Merrill Lynch analyst Steve Fortuna cut his unit growth forecast for the PC hardware industry for 2002 and 2003 based on continued weakness in global IT spending and an apparent lack of light at the end of the tunnel. Fortuna said PC unit shipments would actually decline 3 percent this year, an about-face from his previous forecast of 2.5 percent growth. Fortuna also cut his projections for 2003 growth to 10 percent from an earlier forecast of 15 percent.

The AEA defines tech jobs from its broad base of member companies that are represented by software, semiconductor, telecommunications and mainframe computer companies, according to an AEA spokeswoman. The definition does not include figures from the dot-coin implosion because the AEA considers those companies technology users rather than technology providers, she said.

The AEA was prompted to take a closer look at monthly employment statistics by the dramatic swings the industry has experienced during this downturn. The substance of AEA's report was gleaned from information provided by the U.S. Bureau of Labor Statistics.

AEA's report also found:

* The last six months of 2001 saw a sharp decrease in technology industry employment with 279,000 fewer tech jobs in January than in June 2001. The first half of 2001 saw a loss of 45,000 tech jobs.

* Electronics manufacturing employment has been falling every month since January 2001, with losses totaling 336,000 through June 2002.

* Electronics components manufacturing employment fell by 17,000 jobs during the first half, followed by a loss of 12,000 jobs in both computers and communications equipment manufacturing.

* The communications services industry has been losing jobs at a steady clip since May 2001, with a drop of 111,000 jobs through June 2002.

* Software services was the only high-tech services industry that created jobs in the first half with the addition of 3,000 positions.

Going, Going...

High-tech employment drops by 113,000 jobs during the first half of 2002


Jan 01  5.70   -.8%   -45,200
Jun 01  5.66  -4.9%  -279,000
Jan 02  5.38  -2.1%  -112,700
Jun 02  5.27

Data are subject to revisions

SOURCE: U.S. BUREAU OF LABOR STATISTICS

Note: Table made from bar graph