By the end of September, things were looking up for GlobalFoundries as it closed out the quarter with a 22% gain in revenues over the previous year. In October, the company received more good news. At a press conference outside its massive plant in Essex Junction attended by U.S. Sen. 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 public utility to save on electricity costs.
Then, less than two weeks ago, a sudden lurch in market forces resulted in the global company announcing to its roughly 14,000 employees that layoffs were in the making.
The volatility of the market, and GlobalFoundries’ unexpected announcement, has Vermont employees of the chipmaker wondering if their jobs are on the line. The uncertainty comes as soaring interest rates appear to be impacting the labor market. Last week, the U.S. Bureau of Labor Statistics reported a slight increase in Vermont’s unemployment rate in 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 on Nov. 11 that the company would provide a more complete and comprehensive plan in a company-wide online meeting at the end of the month. Two employees have told VTDigger that the meeting is scheduled for Dec. 1.
Employees received the video just days after Caulfield, in a call with Wall Street analysts, touted the company’s stellar performance in the third quarter. In that call, he also warned that the company would have to begin cutting costs as demand for semiconductors slowed.
The mixed messages were not lost on the company’s workers in Vermont.
“My coworkers and I are frustrated and annoyed that the company has been bragging about profits for the last two years, and at the first downturn has to slash jobs,” said one employee of the Essex Junction plant.
That employee and one other spoke to VTDigger on the condition of anonymity out of fear of retribution for speaking about their employer.
“Can none of those massive profits be used as a bridge to keep knowledgeable employees on the payroll?” the first employee asked. “It seems like an incredibly shortsighted decision and feels insulting after so much talk of 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 have shaped the company’s plans for job cuts.
The global company with headquarters in Malta, New York, and a large plant in Essex Junction has yet to describe the scope of those job cuts or how they might affect the size of the Vermont workforce.
The company confirmed its plans in response to an inquiry from VTDigger last week. When asked to address the employees’ concerns, GlobalFoundries spokesperson Gina DeRossi declined to comment further.
In the video, Caulfield told employees that in the previous four to six weeks, “we have seen an unprecedented shift in the near-term outlook for semiconductor demand.”
An analyst who follows GlobalFoundries said that the demand for semiconductors from data centers had been strong until recently.
“I think that that is beginning to fall off,” said Matt Bryson, senior vice president for research at Wedbush Securities. “Maybe that’s why you’re seeing this incremental dip in demand.”
In addition, as companies that sell consumer electronics worry about a slowdown in the economy, they are deciding to draw down their inventories rather than place new orders, which could also explain the sudden drop, Bryson said.
Caulfield said GlobalFoundries customers “are seeing their customers significantly slowing orders with them.”
As a result of the downturn in demand for semiconductors, Caulfield told employees, the company needs to address its largest cost: labor.
The company had already instituted a hiring freeze, Caulfield said, but based on the depth and duration of the coming downturn, it will have to “selectively reduce staffing in key areas” of the business.
Caulfield did not indicate where staff would be reduced or whether 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 line with our company values, we are going to do our very best to treat those leaving with the respect they deserve and provide them with the right support to ease this transition,” Caulfield said.
The first employee criticized the timing of the announcement, just before the holiday season.
“How are you going to announce this and say there will be layoffs, but we’re not going to tell you anything for three weeks, and have people go over Thanksgiving with that?” the employee asked.
The second employee expressed the frustration more succinctly.
“I feel betrayed,” the worker said.