37,000 jobs to go in swathe of corporate cutbacks

The gloomy picture painted by Invensys was confirmed yesterday by a raft of profit warnings as some 37,000 redundancies were announced on both sides of the Atlantic.

The European engineering giant ABB reported a 40 per cent drop in income from continuing operations and announced 12,000 job cuts worldwide among its 160,000 workers. It employs 8,000 in the UK but no details of where redundancies would fall were given.

The company, which competes with Invensys in some markets, joined a chorus yesterday in warning that its markets were continuing to deteriorate. Joergen Centerman, ABB's chief executive, said: "It is fair to say that the market has rapidly become weaker and we find it unlikely that we will see an upturn in the next 12 months."

The media group Reuters announced that it is to shed 1,340 employees in a drive to save money, as it reported a 21 per cent fall in profits for the first half of the year. Tom Glocer, its newly appointed chief executive, said: "I think the people who foresaw a V-shaped recession were engaging in wishful thinking."

In the US, the telecommunications equipment maker Lucent Technologies posted a massive $1.9bn (£1.3bn) loss for the third quarter of its financial year, and said it would cut up to 20,000 jobs in a bid to return to profit next year.

Lucent, which employed 95,000 at the end of June, also said the second phase in its restructuring will result in a charge of between $7bn and $9bn in the fourth quarter related to the job and product cuts and asset write-offs.

Lucent's chairman and chief executive, Henry Schacht, said: "You must ensure the capacity of the company to grow and prosper if you're going to provide employment for anyone."

Arrow, an American electronics company which posted a 90 per cent drop in quarterly profit, said it would sack 1,000 of its 12,000 staff.

Julian Callow, an economist at CSFB in London, said: "There have been a horrifying number of job cuts in the European Union alone this year, and our sense is that this is as dramatic a pace of corporate restructuring as we have seen since 1992-93."

Sushil Wadhwani, a member of the Bank of England's Monetary Policy Committee, who was alone in calling for interest rates to be cut in June and July, said the slowdown in the US, Germany and Japan was taking its toll across the world.

"Overall, the rather indifferent outlook for the global economy does not bode well for a small, open economy like the UK," he said in a speech yesterday. "Given the deteriorating international and corporate outlook, its quite remarkable that we have seen a rise in retail-sales growth, consumer confidence and house-price growth this year."

ABB's move followed statements from rivals Emerson Electric and Rockwell, which announced lay-offs and lowered profit forecasts because of the world economic slowdown.