For Many Companies, a Slow Housing Market Means Layoffs

A dramatic downturn in all segments of the housing market, especially new construction, forced Andersen Corporation to lay off 440 employees on Tuesday, the company announced.

“We have more capacity than we need to meet demand,” Maureen McDonough, the corporation’s director of corporate communications, said in a conference for reporters held Wednesday. “Unfortunately, we need to reduce our workforce.”

According to the River Falls Journal, during meetings with supervisors held Tuesday afternoon, 400 employees at the corporation’s Bayport plant and 40 employees at its Menomonie, Wis., plant were told they will be laid off at year’s end. Layoffs were restricted to manufacturing jobs and were based solely on seniority.

Andersen, which specializes in high quality windows and doors, is following the lead of many U.S. home builders in slicing projections and eliminating unneeded staff amid falling demand.

The layoffs were made in anticipation of a projected 10-12 percent decline in the housing market, which the company views as a market correction, not a temporary phenomenon. As a result, the firm does not anticipate further layoffs, but is unlikely to rehire many laid-off employees.

“These are very difficult decisions and they’re not made lightly. While the decision was in best long-term interests of company, it has been difficult,” McDonough said.

When home mortgage loans become too expensive for people, fewer are able to buy houses, and demand for new houses declines. Companies who supply the materials for the houses then get hit hard.

This is just another indication of how hard the housing market decline can hamper the economy as a whole, and why some financial experts believe the U.S. is headed into recession.