international observation | layoffs, strikes, factory closures - where are these multinational companies "trapped"?
2024-09-26
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xinhua news agency, beijing, september 24 (reporter cao xiaofan) enterprises are the basic units of the world economy and the most sensitive "barometer" reflecting the global economic prosperity. recently, due to the drag of performance, well-known multinational companies such as volkswagen, intel, and pricewaterhousecoopers have laid off employees, and companies such as us steel and boeing have also experienced large-scale strikes due to poor management and internal conflicts.
observers believe that the weak recovery of the world economy after the epidemic has led to a decline in demand, the tense geopolitical situation has undermined the stability of the supply chain, and the surge in commodity prices has pushed up costs, and other unfavorable macro factors have put pressure on global corporate operations. in addition, "american factors" such as the weaponization of economic and trade issues and the spillover effects of the federal reserve's monetary policy have also had a negative impact on world economic growth and the global business environment.
the world economy is recovering sluggishly
in europe, the manufacturing industry continues to slump, with german companies bearing the brunt. volkswagen announced in september that it was considering layoffs and closing some of its factories in germany; thousands of workers held protests in brussels this month after volkswagen subsidiary audi announced plans to restructure its factory south of brussels, belgium. tire manufacturer continental previously announced layoffs of more than 7,000 people; auto parts manufacturer zf friedrichshafen ag laid off 12,000 people. in addition, german companies such as bayer, miller and sap announced a total of 55,000 layoffs. data shows that the current scale of layoffs by german companies has reached the highest level since 2008.
in the united states, a large number of well-known companies or financial institutions have laid off employees since last year, including industry giants such as google, amazon, microsoft, ibm, tesla, goldman sachs, morgan stanley, citigroup, and blackrock. according to statistics from the business information website crunchbase, more than 191,000 employees of american technology companies were fired in large-scale layoffs last year, and this trend has continued until 2024.
this is the microsoft brand logo photographed in london, uk on november 13, 2021. xinhua news agency (photo by tim ireland)foreign media previously disclosed that samsung electronics of south korea may lay off a large number of employees to cope with the reduction in demand caused by the global economic slowdown. in its layoff decision at the beginning of the year, german multinational bosch group said that the sharp increase in energy and raw material costs, coupled with economic recession and high inflation rates, forced the company to increase revenue and reduce expenditure.
zhao jing, associate researcher at the international cooperation center of the national development and reform commission, said that large multinational companies are facing a sharp increase in operating pressure and have been forced to respond to the crisis by layoffs and shrinking their scale. this is not only a manifestation of corporate strategic adjustments, but also a market signal that shows the uncertainty of the world economic recovery.
the global business environment is deteriorating
observers believe that geopolitical tensions, insufficient demand, and fragmented supply chains have caused the most serious damage to the global business development environment.
in recent years, demand in major economies such as the eu and the united states has been weak. downside risks to the european economy continue to accumulate. germany, the "european economic locomotive", saw its economy shrink on a quarter-on-quarter basis in the second quarter of this year, and the future direction of the eurozone economy remains unclear. in the united states, the long-term high interest rate policy has increasingly suppressed demand.
customers shop in a supermarket in berlin, germany on may 24. photo by xinhua news agency reporter ren pengfeichong quan, president of the china wto research association, told xinhua news agency that in recent years, the continued tension in the geopolitical situation has promoted "anti-globalization", undermined global cooperation, weakened market connections, and made global industrial development increasingly unstable, making the international and business environment faced by enterprises more uncertain.
a recent report released by the world bank shows that the increasingly turbulent geopolitical environment has further exacerbated uncertainty in the world economy, hit consumer and business confidence, and intensified financial market volatility. the report predicts that the world economic growth rate this year and next will be 0.5 percentage points lower than the average level from 2015 to 2019, while the average price of commodities will be nearly 40% higher.
wang hongyu, researcher at the national institute of international strategy at the university of international business and economics and director of the center for economic diplomacy research, believes that after the international financial crisis in 2008, the world economy has been struggling to find new growth points. the new crown epidemic has severely impacted the world economy, resulting in generally weak demand and weak recovery. this is the general background for many multinational companies to fall into operational difficulties.
the “american factor” exacerbates corporate difficulties
a report by s&p global market intelligence pointed out that the federal reserve's long-term maintenance of high interest rates has increased the cost of holding large inventories, forcing some companies to adopt a "no inventory" strategy, increasing supply chain risks.
chong quan pointed out that the united states has weaponized economic and trade issues, frequently used sanctions, abused trade protectionism, and constantly provoked geopolitical conflicts, disrupting the global supply chain and industrial chain oriented towards optimizing resource allocation, and seriously undermining the global trade order and normal economic and trade exchanges.
zhao jing believes that the united states' promotion of "decoupling and breaking chains" has seriously hindered the development of the world economy and science and technology, and has had a negative impact on corporate development. from the formulation of the "chips and science act" to the introduction of the "inflation reduction act" and the promotion of so-called "friendly shore outsourcing", all of them are endangering the international multilateral trading system and disrupting the global industrial chain and supply chain.
wang hongyu believes that the fed's long-term high interest rate policy has led to tight global liquidity and impacted the business environment. although the fed's policy is shifting, the damage it has caused is difficult to make up for.
on september 18, u.s. federal reserve chairman powell attended a press conference in washington. photo by xinhua news agency reporter hu yousongchongquan pointed out that the "dollar tide" formed by the fed's interest rate hikes and cuts has plunged the world economy into a cycle of "prosperity-crisis-depression" one after another. the us monetary policy is irresponsible to the world, considering only its domestic economic conditions and not necessarily in sync with the global economic cycle. this has led to the so-called "america catches a cold, the world takes medicine", exacerbating global financial market fluctuations and ultimately impacting global companies, including many us multinational companies.
