No, I think this is short sighted management not realising how hard this will be for them to recover. Hiring is a hard, slow process - they won't recover this scale quickly.
Not being able to find work for engineers is a failure of imagination - again a failure of management.
I used to suffer depression, and the biggest advice I got was to diversify my sources of self-esteem. It's fragile to only have one source of ego, you want to have hobbies, work, friends and family, all to support you when things go badly. Because we all have off days, it becomes a spiral when we don't have things to help us through.