Local companies tighten belts
X-Rite Inc. announced today it will fall short of its fourth quarter and 2008 sales estimate due to the slowdown in the global economy. The company also announced today a new profit improvement plan to better align its 2009 sales expectations and cost structure. As part of the plan, X-Rite will reduce its workforce by 90 positions.
According to X-Rite, the new profit improvement plan will deliver:
- Up to $20 million in 2009 savings.
- An estimated 2009 restructuring charge of $3.5 million.
- Strong year-end cash position of approximately $47 million.
“We have seen an accelerating decline in demand, particularly in the fourth quarter of 2008,” said CEO Thomas J. Vacchiano Jr. “Large accounts have increasingly delayed projects and smaller end user accounts seemed to be waiting to see what will happen in the economy. Also, we observed that reseller partners took actions to trim their inventories due to the tight credit markets.”
The company expects 2008 net sales in the range of $261 million to $262 million, which represents a decline of approximately 7.7 percent versus 2007 on a pro forma comparable basis.
The profit improvement plan builds on actions X-Rite took in April o2008, which included fast tracking the closure of its Viptronic group in Brixen, Italy. In addition to the 90 job cuts, which exclude the job cuts associated with Viptronic, X-Rite will implement reduced work schedules and furloughs for select groups of employees The company will also reduce executive compensation, as well as reduce third party services and discretionary spending. The plan further calls for a more narrowed focus in certain business segments and the pursuit of manufacturing efficiencies, component cost reductions and distribution and logistics efficiencies.
Also today, Wolverine World Wide Inc. announced a strategic restructuring plan designed to create operating efficiencies, improve its supply chain and create a stronger global brand platform. When fully implemented, the company expects the restructuring plan will result in a net reduction of approximately 450 positions and will generate an annualized pretax benefit in the range of $17 million to $19 million. The plan is the second phase implementation of a top-to-bottom strategic review of the company’s branded businesses and related infrastructure. As part of the first phase, Wolverine decided last year to exit several non-core businesses.
The restructuring plan includes:
- Consolidation of key distribution and global operations functions
- Realignment of the company’s domestic manufacturing operations
- Consideration of a range of alternatives for the Wolverine’s leather business
- Implementation of a corporate cost-reduction program.
Wolverine estimates pretax charges related to the restructuring will range from $31 million to $36 million. The company indicated it will record these charges throughout 2009 as it executes specific initiatives.
Strong and resilient companies continually assess their operating model and related infrastructure, and make changes to stay ahead of the curve, said President and CEO Blake W. Krueger.
“The initiatives announced today position Wolverine for continued success by improving our supply chain, enhancing customer responsiveness and streamlining our operations. As a company, we pride ourselves on our strong team and do not take these workforce and cost reductions lightly. We will ensure that all those impacted will be treated with the utmost respect and receive our assistance with their transition.”