Analysts: Broader trends lead to state’s ‘temporary’ uptick in layoffs

Mass layoffs in the state so far this year are significantly higher than the past two years, but the increase is largely tied to factors outside Wisconsin, financial analysts say.

As of Monday, the state’s Department of Workforce Development had received 85 mass layoff and closing notices that affected 9,040 workers total. That’s nearly 50 percent more than the 6,186 workers affected in 2014 and the 6,425 affected in 2013.

State law generally requires businesses with more than 50 employees in Wisconsin to send DWD a notice 60 days prior to mass layoffs or plant closings affecting at least 25 employees. The numbers correspond to the amount of jobs listed in the notices, so the actual layoffs might be lower later on.

Yet analysts say the layoff notices are an imperfect indicator of where the economy is heading. Analysts point to other positive factors in the state’s economy such as the demand for skilled labor — meaning some of those who were laid off can find a job more easily.

Many of the layoffs are tied to the global economic downturn, the stronger dollar and the drop in commodity prices, affecting companies, such as Joy Global, that have a worldwide presence, the analysts say. Layoffs also can be explained by the state’s heavy reliance on manufacturing, a sector that’s been slowing down nationwide.

“Even small [manufacturers] are exporting more and more these days, and we’ve had a strong dollar, which has really hit exporters in the gut,” said Sara Walker, senior vice president and investment officer at Associated Bank.

The jump in layoff notices is likely only “temporary,” said Brian Jacobsen, the Menomonee Falls-based chief portfolio strategist for Wells Fargo Fund Management.

“The slowdown is more of a lull and readjustment to lower commodity prices than a sustained slowdown,” he said. “Once the businesses, like Joy, shed jobs, they should be in a position to operate as usual. So, I’m not anticipating these higher layoff levels as being a new normal for our economy.”

While calling the layoff notices “very informative,” Jacobsen said he’s found they’re not useful in predicting future unemployment claims or changes in the unemployment rate — which hit its 14-year low last month at 4.3 percent.

The largest layoff announcement so far this year came from Assurant Health, which is going out of business and eliminated 1,200 positions in its Milwaukee office.

Next on the list came Wells Fargo, which said the closing of one of its Milwaukee offices would lead to 839 layoffs. But the office closing came because the economy has actually improved, the company said, which meant the company had seen “steady declines in delinquencies and fewer customers needing extra assistance to remain in their homes.”

Other notable layoff notices from DWD include:
* Dairy Farmers of America closing a cheese plant in Plymouth, impacting 304 workers;
* Johnson Controls indefinitely suspending work on one of its projects in West Allis, although a company spokesman said there were fewer layoffs than the 197 on the notice to DWD;
* Joy Global announcing a temporary closing of one of its departments, which would impact 113;
* ConAgra Foods closing a Ripon facility and laying off 285 employees;
* Hamlin closing a sensor manufacturing plant in Lake Mills and eliminating 175 jobs;
* Grede closing a Berlin foundry and laying off 157.

Senate Minority Leader Jennifer Shilling, D-La Crosse, pounced on the latest numbers from DWD, saying that rather than boosting the state’s economy, Republicans have focused on “political retribution” with legislation limiting John Doe prosecutions or a bill restructuring the Government Accountability Board.

“Thousands of families are being laid off and left behind because Gov. Walker and legislative Republicans are distracted by their divide and conquer political tactics,” Shilling said. “It’s time our leaders focus on what’s really important to families in Wisconsin and end the misguided attacks on good government.”

But Gov. Scott Walker’s administration pointed to other positive indicators in the state’s economy, from initial unemployment claims dropping to new business filings rising.

“Job seekers who are seeking new opportunities, including those affected by dislocation, are benefiting from a robust job market in Wisconsin today,” DWD spokesman John Dipko said in an email. “Our redesigned JobCenterofWisconsin.com surpassed 100,000 job openings last Friday and currently has over 94,000 openings posted. Meanwhile, our state’s unemployment rate is at a 14-year low and remains significantly below the US rate.”

Companies across the state, Dipko said, have reached out to DWD to see whether they might be able to hire some of the employees who have been laid off.

Todd Filter, Manpower’s market vice president for the Wisconsin and northern Illinois region, said the “demand for workers and labor is well above supply,” a trend that doesn’t appear to be slowing down.

And Walker, the Associated Bank senior vice president, said although it’s “always painful when there is job loss,” many of those affected should be able to land a new job.

“Those people that were laid off will find a new job pretty quick,” she said. “Our economy as a whole and the state as a whole is still in very good shape. So if you’re going to lose your job, this is one of the better times to do it.”

— By Polo Rocha
WisBusiness.com