In another round of cutbacks, equipment supplier Milacron Inc. plans to consolidate several manufacturing plants and lay off more employees to reduce costs.
The planned changes were announced July 27 as the Cincinnati-based company released second-quarter figures for 2001. Sales for the quarter fell 20 percent to $323 million and profit thinned to $1.1 million from $16.7 million for the same quarter a year ago.
The company will target small manufacturing operations in North America, both in its plastics and metalworking groups, for the trims, according to Milacron spokesman Tim Neutzling. The number of employees affected - and whether any of Milacron's plants will close - should be decided within three weeks, he said. The layoffs could occur soon after that.
``It's not unexpected during an economic downturn,'' Neutzling said. ``You have to watch your costs to keep cash flow going.''
Milacron closed five plants and five office facilities in 2000 and already has pared back its work force by another 15 percent this year. The company has 36 plants in North America, 11 of them in plastics manufacturing and about 4,500 employees.
The move will result in $12 million to $14 million in charges for the third quarter of 2001 and $3 million to $4 million in the fourth quarter. The publicly traded company also said it will save $18 million to $20 million in 2002 from the cutbacks, with some of those savings expected by the fourth quarter.
No word was given on which Milacron subsidiaries or operations will be affected.
The move is necessary to boost Milacron's cost structure as it fights weaker profits, said equity analyst Walter Liptak of McDonald & Co. The equipment maker could look at its Milacron plants and at the plants of companies it has acquired during the past several years, Liptak said.
``It's the only rational thing to do in business today,'' said Liptak, who is based in Chicago. ``Everyone in the world is doing it right now. It should help keep their balance sheet in good shape.''
Milacron's third-quarter results are likely to mirror those of the past quarter, Ronald Brown, Milacron chairman, president and chief executive officer, said in a news release. The cost measures should put Milacron in a good position competitively when the market rebounds, Brown said.
The company's stock price rose on the morning of July 27 to $18.15 a share, up about 3.8 percent from the close of the previous day.