Stanley Works, one of the industry’s leading makers of tools and other home-improvement products, has announced plans to cut 10 percent of its work force, or approximately 2,000 workers, to prepare for the possibility of “a prolonged and deeper downturn.” The New Britain, Conn., manufacturer will also shut down three manufacturing plants and eliminate “certain layers of management,” the company said in a prepared statement. No further details were given on the closed facilities or the management cuts.
These actions, which will be initiated in December, are the results of “rapidly deteriorating business conditions” in Stanley’s construction, DIY and industrial sectors during the first quarter, the company said. The recent strengthening of the U.S. dollar against major currencies has exerted downward pressure on fourth-quarter earnings. The depth of the decline has outpaced previous recessions, Stanley said.
“The company’s physical unit volume shipments have never declined by 7 percent or greater for two consecutive quarters,” the company noted.
The cost-saving initiatives announced on Dec. 11 are expected to produce a pre-tax earnings benefit of approximately $115 million in 2009, according to Stanley’s announcement. Further overhead reduction measures not related to employment levels will result in an additional $55 million in pre-tax earnings next year, Stanley reported.