Profits do not guarantee a job

Employees at profitable companies are not immune to layoffs as the U.S. economy shrinks, an economic analyst said.

Business have become more preemptive in terms of responding to downturns, Andrew Bartels of consulting firm Forrester Research told The Boston Globe Wednesday.

They want to get ahead of bad news, he said. If you've been expecting growth and suddenly you see this cliff ahead of you, you think, 'Uh-oh, we better put on the brakes.'

Employees at Philips Healthcare in Andover, Ma., found out the hard way that profits do not guarantee a job. Sales at the company -- makers of medical equipment -- were up 5 percent and profits up 4.8 percent in the third quarter. Still, expecting tighter credit to dampen future sales, the company announced it would cut 1,600 employees.

Capital purchases in some cases are on hold because of all the credit problems, company spokesman Ian Race said.

Alan Clayton-Matthews, associate economics professor at the University of Massachusetts, said a trend in preemptive layoffs could make things worse because you'll have less personal income and less spending in the economy.

If all employers did this, it would be like shooting themselves in the foot, he said.

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