Via The Wall Street Journal
By JOANN S. LUBLIN and ROGER CHENG
WASHINGTON—U.S. corporations remain hesitant to give the gift of a new job this holiday season, except for a select few.
That’s the sentiment among chief executives gathered here at The Wall Street Journal’s CEO Council. Leaders from across the corporate landscape spoke of cautiousness in rebuilding work forces reduced severely during the worst economic downturn in generations.
“We aren’t close to needing to hire people in a significant way,” said Mike Splinter, chief executive of semiconductor equipment maker Applied Materials Inc. The company now employs about 15% fewer people than two years ago, largely as a result of layoffs, Mr . Splinter said.
Other companies also are waiting to hire. As of October, the U.S. unemployment rate—at 10.2%—was the highest since April 1983, and the percentage of those who are unemployed, marginally attached to the labor force or working part-time because they have no other option stood at 17.5%.
Stephen P. MacMillan, chief executive of orthopedic product maker Stryker Corp., isn’t optimistic. “I don’t see the employment picture changing much over the next year,” he said.
Any improvement may not come from large business, said Rupert Murdoch, chief executive of News Corp., owner of The Wall Street Journal.
“You’ve got a huge number of unemployed here in the United States, and we’re not going to get that cured or people re-employed until we get the formation of small business on a big scale,” Mr. Murdoch said, adding that the lack of jobs remains the biggest short-term obstacle.
Meanwhile, Thomas Glocer, chief executive of Thomson Reuters Corp., called unemployment “a serious economic and political issue” because some jobs aren’t coming back as they have been eliminated, sent overseas or replaced by technology. He said the U.S. would see a “slow climb back.”
The hesitancy of companies to hire comes despite a surge in productivity in the third quarter, possibly indicating that existing workers are being stretched to do more.
Mr. Splinter said that in Applied Materials’ case, the company’s recruitment plans depend “on how fast our customers see improvement.” Similarly, he didn’t foresee an imminent end to the company’s cost-cutting efforts that are part of a broad efficiency drive.
“We want to become more efficient because we will be stronger” once the economy fully recovers, Mr. Splinter said.
Those companies that are hiring are doing so strategically.
“Selectively, we’re hiring on certain projects,” said John Chambers, chief executive of networking giant Cisco Systems Inc. While most of the hiring is being done in the company’s 30 new business ventures, he said some new jobs still tie into the core routing and switching business.
Job creation usually lags capital investments by a few quarters, Mr. Chambers said, noting that the company has done its investing through several recent acquisitions.
The theme of selective hiring was echoed by CEOs from companies as diverse as food maker Conagra Foods Inc., communications-chip supplier Broadcom Corp., and power companies Progress Energy Inc. and Calpine Corp.
Nearly 100 chief executives were attending the annual WSJ CEO Council meeting Monday and Tuesday in the nation’s capital to discuss business and political issues and meet with top policy makers. Participants scheduled to attend included White House Chief of Staff Rahm Emanuel; Health and Human Services Secretary Kathleen Sebelius; and Council of Economic Advisers Chair Christina Romer.
To be sure, not all chief executives attending the meeting halted hiring during the downturn. Among them is Surya N. Mohapatra, chairman and CEO of Quest Diagnostics Inc.
“I never stopped hiring,” Dr. Mohapatra said. “Every year, we hire almost 2,000 people,” including engineers, scientists and managers. The company also avoided significant layoffs, he noted.
How soon Quest Diagnostics accelerates its current pace of hiring is unclear, however. A big uptick “won’t happen overnight,” the CEO said.
—Jon Kamp, Mark Peters, George Stahl and Paul Ziobro contributed to this report.