In this article, we’ll look at the reasons behind the growing wave of job cuts that are affecting major US companies, including Gap and 3M, and how these layoffs have expanded beyond the tech sector.
Key Takeaways:
A significant number of US companies have been affected by a wave of layoffs that began in late 2022 and has shown no signs of abating in 2023.
Gap and 3M are the latest corporations to announce job cuts. Gap will be trimming hundreds of jobs, while 3M plans to eliminate 6,000 positions.
In the past weeks, Lyft, Meta, Google, and Goldman Sachs have all announced significant job cuts. Lyft alone reduced its workforce by 30%, or 1,200 jobs.
The reason for these cutbacks is the ongoing economic slump and weak sales.
Gap, a popular clothing retailer, has announced that it will be cutting hundreds of jobs. The company’s primary objective is to become more “nimble and less bureaucratic.”
The current round of cuts is expected to be larger than the 500 jobs Gap eliminated from its corporate ranks in September.
In an effort to speed up decision-making, leaders from Gap, Old Navy, Banana Republic, and Athleta have been conducting a wide-ranging review.
The goal is to strip out layers of management and create more robust roles with increased individual empowerment.
3M, the well-known manufacturer of Scotch tape and Post-It Notes, has announced that it will be cutting 6,000 positions across all parts of the company.
The aim is to streamline operations, simplify the supply chain, and reduce layers of management.
The company’s CEO, Mike Roman, stated that the cuts would eliminate 10% of 3M’s global workforce.
This move is expected to save the company between $700 to $900 million in pretax costs. In January, 3M had announced the removal of 2,500 manufacturing positions.
The tech sector has been hit particularly hard by the wave of layoffs. According to data from Layoffs.fyi, tech companies have slashed more than 170,000 jobs in 2023 alone.
This is in stark contrast to the 80,000 jobs lost from March to December 2020 and the 15,000 jobs eliminated in 2021.
Both Gap and 3M have initiated restructuring efforts to increase efficiency within their organizations. Gap’s restructuring aims to address years of growing bureaucracy that has hindered the company’s effectiveness.
Executives within the organization have focused more on protecting their turf rather than creating products that resonate with shoppers.
As for 3M, the company is focused on streamlining operations by reducing layers of management and simplifying its supply chain.
This will enable the organization to operate more efficiently and ultimately save on costs.
Several economic factors have contributed to the recent wave of layoffs in various industries.
The ongoing economic downturn and stagnating sales have pushed companies to reevaluate their workforce size and cut jobs as a cost-saving measure.
Moreover, numerous companies have been operating without permanent leaders, which has resulted in a lack of clear direction and vision.
For instance, Gap has been without a permanent CEO since July, and the board has yet to appoint a new leader from outside the company.
In addition to economic pressures, other factors such as softening economies and the pursuit of efficiency have contributed to the layoffs.
E-commerce company Mercari Inc. plans to cut 20% of its U.S.-based staff and shift a number of employees focused on growing the U.S. business to concentrate on customers in its home market of Japan.
The Tokyo-based company initially aimed to challenge giants like Amazon.com Inc. and eBay Inc. in the American market but has experienced declining business in recent quarters.
Gap’s restructuring, for instance, is more about addressing years of growing bureaucracy that has made the company inefficient.
The company had become too siloed, with executives more concerned about protecting their territory than creating products that resonate with shoppers. Decision-making related to style was often bogged down in endless meetings.
Other companies, such as Facebook’s and Google’s corporate parents, Dow Inc., and 3M Co., have also announced layoffs in recent months due to softening economies or in a bid to seek efficiencies.
As the layoff wave continues to impact major US companies, organizations like Gap and 3M are striving to streamline operations and become more efficient.
The ongoing economic downturn and stagnating sales have only exacerbated this trend.
While the tech sector has been hit particularly hard, the effects are being felt across industries, and it remains to be seen how businesses will adapt to these challenging circumstances.
With a combination of economic pressures, softening economies, and the pursuit of efficiency driving the layoffs, companies must find ways to stay competitive and navigate the difficult economic landscape.
