It was mostly bad news from the world's biggest home appliance maker Whirlpool Corp. (Benton Harbor, MI, U.S.). Whirlpool released disappointing third-quarter earnings and announced 5000 layoffs before the end of 2009.
Earnings from continuing operations decreased 7% to $163 million, or $2.15 per diluted share, compared to $175 million, or $2.20 per diluted share reported during the previous year's quarter. Revenue of $4.9 billion for the quarter increased 1% from the $4.8 billion reported in the third quarter of 2007.
"We are in the midst of a rapidly changing and very challenging economic environment," said Whirlpool chairman/CEO Jeff Fettig. "We have seen a sharp drop in demand in North America and Europe during the third quarter, and we do not expect demand conditions to improve in the near term."
Fettig said third-quarter results were hit by declining demand and cost inflation, which were only partially offset by improved price/mix and productivity. Factors such as a the global credit crisis in an already weakening global economy, declining home values, rising unemployment, and very low consumer confidence levels, Fettig said, will likely keep appliance demand low through at least mid-2009.
"In anticipation of this environment, we have announced substantial cost and production capacity reductions to adjust our business cost structure to expected demand levels," Fettig said. "We will reduce our global workforce by approximately 5,000 positions by the end of 2009. In addition to the four facility closures we have announced earlier this year, we are also closing our Jackson, Tennessee facility and transferring production into our Findlay, Ohio location."
The global reduction of 5000 jobs includes job cuts already been announced through plant closures along with new reductions taking place through the end of 2009.
Closing the Jackson dishwasher plant will result in about 500 job losses. Whirlpool announced earlier this year that the following four plants would close, resulting in a reduction of approximately 2,000 jobs:
Approximately 500 salaried positions will be cut throughout North America, including both full time and contractor positions.
- LaVergne, TN, U.S.
- Oxford, MS, U.S.
- Puebla, Mexico
- Reynosa, Mexico
About 1900 positions will be cut in operations outside the U.S., most of them in Europe. These include new and previously announced reductions.
Whirlpool said these cuts do not include current or potential future layoffs that are intended to be temporary in nature.
According to Fettig, the actions are expected to produce savings of approximately $275 million on an annualized basis. "While decisions to eliminate jobs and close facilities are very difficult, they are necessary to create a cost-effective business structure. These changes will ensure that our company is proactively taking the necessary steps to adjust its cost structure and production capacity to lower expected demand levels."
Looking ahead, the company expects full-year industry-wide major appliance shipments to fall 10% in the U.S., down from previous guidance of 6% to 7%.
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