By the end of September, things were looking good for GlobalFoundries as they finished the quarter with a 22% increase in revenue over the prior year. In October, the company received more good news. At a press conference outside its massive Essex Junction facility attended by US Senator Patrick Leahy, D-Vt., the company announced $30 million in federal funding to develop advanced chips. Ten days later, it received state approval to form its own utility to save on electricity costs.
Then, less than two weeks ago, a sudden downturn in market forces led the global company to announce to its approximately 14,000 employees that layoffs were pending.
Market volatility and the unexpected announcement from GlobalFoundries have employees at the Vermont chipmaker wondering if their jobs were in danger. The uncertainty comes when rising interest rates appear to be impacting the job market. Last week, the US Bureau of Labor Statistics reported a slight increase in Vermont’s unemployment rate for October, from 2.1% to 2.3%. It marked the first increase since January 2021.
GlobalFoundries Chief Executive Officer Thomas Caulfield said in a video distributed to employees Nov. 11 that the company will provide a more comprehensive and comprehensive plan in a company-wide online meeting later this month. Two employees told VTDigger the meeting is scheduled for Dec. 1.
Employees received the video just days after Caulfield touted the company’s stellar third-quarter performance in a phone call with Wall Street analysts. In that call, he also warned that the company would have to start cutting costs due to slowing demand for semiconductors.
The mixed messages have not escaped workers at the Vermont company.
“My colleagues and I are frustrated and annoyed that the company has been bragging about profits for the past two years, and has to cut jobs the first recession,” said an employee at the Essex Junction plant.
That employee and another spoke to VTDigger on condition of anonymity out of fear of retaliation for speaking out about their employer.
“Can none of those huge profits be used as a bridge to keep employees informed about payroll?” asked the first clerk. “It seems like an incredibly short-sighted decision and it feels hurtful after talking so much about big money.”
In the four-and-a-half-minute video obtained by VTDigger, Caulfield delivered what he called “an important and sobering message,” describing the economic forces that shaped the company’s plans for job cuts.
The global firm with headquarters in Malta, New York and a large plant in Essex Junction has yet to describe the extent of those job cuts or how they could impact the size of Vermont’s workforce.
The company confirmed its plans in response to a request from VTDigger last week. When asked to address employee concerns, GlobalFoundries spokeswoman Gina DeRossi declined to comment further.
In the video, Caulfield told employees that over the past four to six weeks, “we’ve seen an unprecedented shift in the near-term outlook for semiconductor demand.”
An analyst following GlobalFoundries said demand for semiconductors from data centers has been strong until recently.
“I think it’s starting to decline,” said Matt Bryson, senior vice president for research at Wedbush Securities. “Maybe that’s why you’re seeing this incremental decline in demand.”
Also, as companies that sell consumer electronics are concerned about a slowdown in the economy, they are deciding to reduce inventories rather than place new orders, which could also explain the sudden decline, Bryson said.
Caulfield said GlobalFoundries’ customers “are seeing their customers significantly slow down ordering with them.”
As a result of declining demand for semiconductors, Caulfield told employees, the company faces its biggest cost: labor.
The company already had a hiring freeze in place, Caulfield said, but based on the depth and duration of the impending recession, it will need to “selectively reduce staff in key areas” of the company.
Caulfield did not indicate where staffing would be cut or if the Essex Junction plant, which includes more than 2,000 employees and 800 contractors, would be affected. GlobalFoundries has other factories in New York, Germany and Singapore.
“In keeping with our corporate values, we will do our best to treat those leaving with the respect they deserve and provide them with the right support to smooth this transition,” Caulfield said.
The first employee criticized the timing of the announcement, just before the holiday season.
“How are you going to announce that and say there’s going to be layoffs, but we’re not going to tell you anything for three weeks, and people are going to go beyond Thanksgiving with that?” the clerk asked.
The second employee expressed his frustration more succinctly.
“I feel betrayed,” said the worker.
Do you work at GlobalFoundries? If so, we would like to talk to you about potential layoffs. Please complete the form below. (Anonymous entries are welcome, and we won’t share your name without your permission.)
Do you want to stay updated on the latest business news? Sign up here to receive a weekly email about all VTDigger reports on local businesses and economic trends. And check out our new Business section here.