Pfizer aiming for 30,900 layoffs through 2012

Pfizer (PFE) has laid off 26,300 employees since 2005, and hopes eventually to lay off a total of 30,900 through 2012, according to its 10-Q filing with the SEC.

The company had several rounds of layoffs before its acquisition of Wyeth in an attempt to get $6 billion in annual savings out of its business model. The company has said it wants to ax about 19,500 jobs to make the Wyeth merger work. The new company will have about 130,000 workers. The layoffs are ongoing, Pfizer said:

In the third quarter of 2009, we reduced our workforce by approximately 1,100 employees and, in the first nine months of 2009, we reduced our workforce by approximately 6,500 employees.

Pfizer gives two sets of costs related to all those layoffs. On page 9 the company says:

During the first nine months of 2009 we expensed $200 million for Employee termination costs …

That would mean it costs about $30,769 per employee in severance payments and benefits. But on page 33, in a discussion of workforce reduction, Pfizer adds:

During the third quarter of 2009, we incurred costs related to this cost-reduction initiative of $141 million and, in the first nine months of 2009, we incurred costs related to this cost-reduction initiative of $802 million.

That works out at about $123,385 per employee — a similar sum associated with Merck’s layoff program.

And finally: Although Pfizer’s troubles with the states and the feds over Bextra are all wrapped up, shareholders have just gotten started. A number of shareholder derivative actions have been filed. Pfizer said:

These actions allege that the individual defendants breached fiduciary duties by causing or allowing Pfizer to engage in off-label promotion of certain drugs, including Bextra.

Actually, more Wall Street induced job loss.

Since the Reagan years there has been limited enforcement of anti-trust laws. As a result big companies continue to merge, creating mega corporations and creating huge fees to line the pockets of the Wall Street investment banks. To pay the cost of the merger, tens of thousands of workers are let go. These big corporations spend millions in campaign contributions to politicians.

The lifting of the Glass-Steagall act resulted in the creation of mega-banks now deemed too large to fail. The government spent trillions saving Goldman Sachs, Citibank, Bank of America, JP Morgan and others. Less than a year later these banks are paying billions in bonuses to management.

The aggregation of economic power in the hands of a few mega corporations has resulted in an unhealthy, corrupt, and uncompetitive alliance between big government, Wall Street, and big business. The consequences are massive losses of middle class jobs and huge government deficits. These deficits result both from the cost of bailing out big banks and social spending to alleviate some of the social costs incurred by unemployment.

In this case, had the government prohibited the merger on anti-trust grounds, we would have had more competition in the industry as well as more jobs in the economy.

Under the recent Bush administration, enforcement of anti-trust laws came to a standstill. While Obama promised stricter enforcement of anti-trust laws, his administration clearly has done nothing to stop this merger which was announced only a few days (January 26) after he was inaugurated.

Given the decision by Pfizer to purchase Wyeth was made during the waning days of the Bush administration, and the corporation’s plan to pay for the acquisition included the layoffs, it is unfair to blame Democrats for these lost jobs. It is fair to blame Obama for continuing the Bush administration’s laissez fair approach to anti-trust policy. Certainly the Obama Justice Department could have opposed the merger. However, had a Republican Justice Department reviewed the merger there is zero chance it would have been opposed by the government.

This begs the question. Should the government foster more competition in the US economy by taking an extremely aggressive approach in opposing big corporate mergers within key industries? It might be more healthy for the overall economy to have fewer “too big to fail” mega corporations.

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