NEW BRITAIN - Stanley Black & Decker Inc. announced Thursday that the company is planning on cutting back workers and shutting down work sites to reduce annual costs by $200 million.
Don Allan, the company’s chief financial officer, said as they approach the cost reduction program, they are focused on ensuring their commercial and innovation organizations have ample resources to continue growing above market and look toward areas where they can rationalize leadership structures or organizations to serve the businesses more efficiently.
“This $200 million cost reduction program is a proactive response, which will allow our businesses to demonstrate a solid level of margin growth in 2020,” said Allan. He also pointed out that the company expects a 3.5 percent to 4 percent organic growth for 2019, which reflects a slower economy.
The headquarters of the company founded 176 years ago is in New Britain. When asked how this decision would impact the city, Abigail Dreher, Stanley’s director of public affairs, said they remain committed to the city and the state.
“The New Britain plant remains an important part of our footprint going forward. We don’t have details to share beyond that at this point,” she said.
Bill Carroll, the city’s director of the economic development, said Stanley Black & Decker has not reached out to the city regarding the cutback decision.
With five manufacturing sites in town, Carroll said there are roughly 600 local employees who work for Stanley, so it is important for those jobs to remain in the city.
“The city has always had a good relationship with the company, so we’re expecting to have conversations with them about the decision soon,” he said.
James Loree, president and chief executive officer, said in a statement that in order to position the business for success in 2020 and beyond, they have already begun implementing new cost and pricing actions, as well as accelerating their $300 - $500 million multi-year margin resiliency initiative. “These actions will preserve our ability to generate continued earnings growth and manage externally driven volatility,” he said.
Over the past three years, the company has produced strong organic growth, said Loree. “We have also executed on multiple revenue growth catalysts, including Craftsman, revenue synergies, emerging markets, e-commerce and breakthrough innovations, that are generating success in the market and position us for continued share gains.”
Its tool and storage net sales increased 4 percent in the third quarter compared to the same time last year. The growth was led by North America sales, specifically driven by the rollout of the Craftsman brand and new product innovations, including DeWalt Flexvolt and Atomic & Xtreme. Industrial net sales increased by 13 percent over the same period last year. However, revenues for its fastening industry were down 4 percent due to inventory reductions and lower production levels within the automotive and industrial customers. Revenues in its security sector saw a small growth of 1 percent for the quarter led by North America, which reflects higher volumes within health care, automatic doors, and electronic security.
Allan commented that with the modest organic growth in its security sector and with order rates and backlogs for electronic security being in strong positions, “We are encouraged by this momentum and believe the business is positioned to generate positive organic growth and margin expansion in the fourth quarter and beyond.”
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