As the UK wakes up this morning to the reality of being officially in recession, the three day working week is starting to look inevitable in certain sectors of industry. The news that Britain's largest steel maker,
Corus, is to lay off 3,500 of its work forces added to the expected announcement that auto parts manufacturer GKN is due to announce that they will also be laying off thousands, in the wake of negative profits.
Signs that the automobile industry is being especially hard hit by the recession is the news that Jaguar Land Rover are also considering making yet another 1,500 job cuts within the next week or so. .
Corus, who employ 24,000 in plants situated throughout the UK, are in a period of restructure in an attempt to withstand strong competition in a rapidly dwindling market, and exceptionally strong competition from Brazil and India.
In what be a last minute attempt to prevent these painful job cuts, Business Secretary Lord Mandelson is believed to be in talks with the Treasury. His obvious goal is to prevent these cuts in work force for the car industry, and a probable compromise is to partially finance the salary costs, as well as suggesting that a three day working week be implemented at these plants still things begin to recover in the economy, which might well be a few years away. With car manufacturers throughout the World hinting and threatening that three day weeks and production breaks are inevitable, it looks like the UK will have no option but to follow suit.
On a more positive note, it appears that the UK public while cutting back on major purchases, such as property, cars, electrical goods and just about everything else, are spending more on cosmetics and personal hygiene products as well as on entertainment . These positive trends were well in evidence on Friday as PZ Cussons, whose brand name Imperial Leather and Carex both announced growth figures of more than ten percent in the last quarter of 2008.
The PZ Cussons group, awarded a M.E.N. Business of the Year prize for 2008, announced that it was continuing to witness growth in their UK business. A spokesman for the company said that they had put their success down to new initiatives, such as the re-launch and update of fragrances and domestic products in their Carex range. This included anti-bacterial wipes and waterless hand gels.
Another company that seems to be bucking the downward trend exceptionally well is BSkyB who's expected announcement of trading results for the second half of 2008 December 31 will show a downturn, but one that is minor when compared to the state of the UK economy as it stands at the moment.
The forecast of pre-tax profits of £290m for BSkyB shows an increase of fifteen per cent on the same period in 2007.
So while the UK publics are digging in to see this recession through, it would appear that the trends are many of them are spending more time at home, and making a determined effort to look and smell better!
Late Friday on the US stock market, stocks continued their decline with disappointing earnings being reported by some industry standards such as Microsoft and Fifth Third Bancorp. The announcement, although expected, that Microsoft were to pay off 5,000 people Worldwide did send a chill down a few people spines on Wall Street as they announced to shareholders that they would be unwilling to provide a profit forecast for 2009.
The Dow Jones industrial average slipped 2.5 percent, to 8077.56, with Wells Fargo and Bank of America slumping by more than 13 percent for the week. These falls added fuel to the fire that the banks may well is forced to take decisive steps in order to shore up their balance sheets.
Average annual profits have decreased since January 2008 by sixty percent for the 69 companies that make up the S&P 500 whose fourth-quarter results have been released to date. U.S. financial analysts are now forecasting that most companies will report more than a 30 percent drop in profits for the last quarter of 2008 alone.
President Obama in a determined effort to show that he will be a skilled president as well as a great orator began to pressed congressional leaders to reach a consensus on an $825 billion stimulus plan. He warned that the country may be facing an economic crisis that was "unprecedented". Obama's warnings were given some added weight with the announcements that average home prices dropped the most since 1990 in November 2008, housing starts fell 16 percent in December and the number of Americans filing first-time claims for jobless benefits climbed to its highest level since 1983.
