By PETER HUSSMANN
Whirlpool Corporation plans to eliminate 5,000 jobs from its North American and European operations, including 1,200 salaried positions, in response to a continued weak global economy.
The Benton Harbor, Mich.-based company announced its "cost and capacity reduction" plan in releasing its third quarter results today.
"As we previously indicated, in a period of uncertain economic growth and consumer demand, we would be prepared to take the necessary actions in order to expand our operating margins and improve our earnings," said Whirlpool CEO Jeff Fettig. "Given the weakening global economic environment, we are today announcing aggressive plans that will result in substantial cost and capacity reductions. The plans are the result of a comprehensive global review of our operations, products and manufacturing facilities."
On Thursday, Whirlpool said that it planned to close its Fort Smith, Ark., refrigeration manufacturing facility by the middle of 2012 and consolidate its operations in Mexico, Ohio and Amana, Iowa, where about 160 jobs are expected to be added. The Fort Smith closure will impact approximately 1,000 jobs.
The workforce reduction of 5,000 employees in North America and Europe equate to a 10 percent workforce reduction in those regions. In addition to cutting 1,200 salaried employees and the closure of the Fort Smith operation, Whirlpool said it would:
- Relocate dishwasher production from Neunkirchen, Germany to Poland in 2012.
- Take additional organizational efficiency actions in North America and Europe.
- Reduce overall capacity by approximately 6 million units.
The actions are expected to result in $400 million in annual cost savings by the end of 2013, the company said.
"We are taking necessary actions to address a much more challenging global economic environment," Fettig said. "We believe our cost and capacity reduction initiatives, recently announced cost-based price increases and innovative product launches will enable us to expand operating margins and deliver long-term value to shareholders."
In announcing its third quarter results, Whirlpool said net earnings for the period totaled $177 million, or $2.27 per diluted share, compared to net earnings of $79 million, or $1.02 per diluted share, for the same period last year.
Sales in 2011 were $4.6 billion, compared to $4.5 billion reported in the third quarter of 2010. Third quarter operating profit totaled $136 million compared with $234 million in the previous year. Weaker global demand and higher raw material and oil-related costs during the quarter offset the benefits of ongoing productivity, cost reduction initiatives and previously announced price increases, the company said.
"During the quarter, we experienced weaker than expected global industry demand and elevated material costs," Fettig said. "Our results were negatively impacted by recessionary demand levels in developed countries, a slowdown in emerging markets and high levels of inflation in material costs."
Third quarter sales in North America decreased 2 percent from the previous year to $2.4 billion. Operating profit for the region in the quarter was $62 million compared to $114 million the year before.
Based on the current economic outlook, Whirlpool expects full-year 2011 U.S. industry unit shipments to decrease approximately 3 to 5 percent.