First I saw it in Facebook posts, then in all the major newspapers. Trump's Press Secretary Tweets out that Amgen's CEO indicates Amgen will be adding 1,600 jobs. An L.A. Times story followed up with Amgen that the company plans to hire 1,600 people in the U.S. this year, including both "new skills" folks and to replace folks that have left the company through attrition. Is this really newsworthy?
Let's take a closer look.
The key word here is "attrition." Every company has attrition, also known as turnover. People quit, get laid off, terminated, etc. What is Amgen's attrition rate? This is not publicly known information, although a State of California Employee Training Panel issued a report showing a turnover rate of 11% in September 2015.
Let's be conservative (not in the political sense) and cut that by about a third, down to a rate of 8%. Amgen has roughly 12,000 U.S. employees out of 19,000 total. At 12,000 employees and an attrition rate of 8%, Amgen would have to hire nearly 1,000 people in the U.S. in 2016 just to replace existing jobs.
That hypothetically leaves about 600 "new" positions, which is great, but not particularly significant for a company of 18,000 employees. Don't get me wrong...it's wonderful that our local pride and joy is hiring. But this is not particularly worthy of major newspaper coverage and a special "Tweet" by the White House Press Secretary.
As you can see in the chart above, the trend does not appear to be a friend of jobs. While revenue has grown at a compound annual growth rate south of 5% over 11 years, total headcount has dropped by 4% in the aggregate. This has made Amgen a much more efficient company, at the expense of jobs. But that is typical for a company of Amgen's size to continue delivering value to shareholders - look to cost cutting to offset stagnating revenue growth in order to drive the bottom line.
Most large public companies go through this cycle...grow, grow, grow...stagnate...restructure. In 2014, Amgen announced a restructuring plan involving 3,500 to 4,000 staff reductions and consolidation of facilities in Washington, Colorado and Thousand Oaks.
In any case, it is great to see Amgen hiring. There are currently over 500 jobs listed worldwide for our local Fortune 500 resident in the Conejo Valley. Visit careers.amgen.com to learn more.
And for links to over 300 local employers throughout the Conejo Valley, Greater Ventura County and surrounding areas, visit THIS PAGE.
And on one last marginally related note, here is a compilation of the first sentence of Amgen's annual "Letter to Shareholders" from its CEO over the last 10 years. Maybe it's time to hire a more interesting writer! :) Let's see what the 2016 letter looks like** when published this coming March at investors.amgen.com. Exceptional, landmark, extraordinary, momentous and _____________. What will it be? President Trump might use "tremendous," "incredible" or perhaps, "yuuuuuge!"
** UPDATE: Amgen changed it up a bit with "For Amgen, 2016 was a strong year..."
- 2015 was a momentous year for Amgen.
- 2014 was an extraordinary year for Amgen--
- 2013 was a landmark year for Amgen.
- 2012 was an exceptional year for Amgen.
- We're proud of what Amgen accomplished in 2011 - a solid year
- 2010 was a year of challenges met and promises delivered...
- In 2009, Amgen...weathered the most challenging economic environment in our 30-year history.
- 2008 was a good year for Amgen...
- 2007 was not the year we expected.
- I am pleased to report that Amgen delivered excellent performance in 2006.