Buffett Says Berkshire Hathaway Adding Staff After Slashing Jobs in 2009
Billionaire Warren Buffett, whose Berkshire Hathaway Inc. cut more than 20,000 jobs last year, said his company is now adding staff as a recovering economy boosts demand at its industrial units.
“We do hire people when we have something for them to do,” Buffett told investors today in Omaha, Nebraska, where Berkshire is holding its annual shareholders’ meeting. “We are a net hirer now.”
Berkshire swung to a profit in the three months ended March 31 after posting a loss in the first quarter of 2009, according to a slide posted by today at the company’s annual meeting of shareholders in Omaha, Nebraska. Berkshire has said its overall workforce fell last year by about 9.7 percent, or 23,970 jobs.
The economy “picked up steam in March and April,” Buffett said today. That followed “sort of a sputtering recovery a few months ago.”
Berkshire bought railroad Burlington Northern Santa Fe Corp. for about $27 billion in February in Buffett’s biggest acquisition, a deal he called an “all-in wager” on the U.S. economy. The purchase will reduce Berkshire’s reliance on insurance operations and housing-related businesses that faltered in the recession.
‘Seeing an Uptick’
The company posted net income of $3.63 billion in the first quarter, compared with a net loss of $1.5 billion in the same period a year earlier, according to the slide.
In businesses that serve broad industries, like railroads, “we are seeing an uptick,” Buffett said.
U.S. joblessness measured at 9.7 percent in March. The Labor Department said April 29 that fewer Americans filed claims for unemployment benefits the week before, a sign the economic rebound is beginning to lift the labor market. Initial jobless claims fell by 11,000 to 448,000 in the week ended April 24. The number of people receiving unemployment insurance and those getting extended payments decreased.
Profit from insurance underwriting, including car-coverage specialist Geico and reinsurer General Re, rose to $226 million from $202 million in the year-earlier period, Berkshire said today in a statement distributed by Business Wire.
Regulated businesses, including the railroad as well as utility and energy units, doubled to $555 million.
Manufacturing, Service and Retailing
Manufacturing, service and retailing jumped 85 percent to $477 million in the first quarter from $258 million in the same period in 2009. That group includes Marmon Holdings Inc., a maker of construction materials; carpet manufacturer Shaw Industries; and Fruit of the Loom, which produces underwear and other clothing, according to the company’s annual report. Berkshire didn’t break down results by unit.
Fruit of the Loom and Shaw Industries reported the biggest job cuts among the parent company’s units in 2009. The maker of underwear and other clothing cut 7,944 workers last year, or 23 percent of staff, and Shaw shed 3,482 jobs, or 12 percent, according to Berkshire’s annual report.
Berkshire’s Class A shares have risen 16 percent this year in New York Stock Exchange trading. They fell $1,476 to $115,325 in yesterday’s trading.
In his annual letter to shareholders on Feb. 27, Buffett wrote that the U.S. residential real estate slump will end by about 2011 and “the credit crisis has abated,” boosting earnings potential.
The U.S. economy expanded at a 3.2 percent annual rate in the first quarter as households spent more money, the Commerce Department said yesterday. Consumer spending rose the most in three years, and business activity in the U.S. expanded in April at the fastest pace in five years.
“Though the path has not been smooth, our economic system has worked extraordinarily well over time,” Buffett said in a February 2009 letter to shareholders. “It has unleashed human potential as no other system has, and it will continue to do so.”