Machinery maker Hillenbrand Inc. plans to cut its workforce by about 5 percent in its injection molding and hot runner equipment unit and shrink its footprint, in the face of a tough market.
President and CEO Kimberly Ryan said in a Feb. 6 earnings call that the company faces softening demand and more pricing pressure globally in that segment, its Molding Technology Solutions unit, and it plans to pare back jobs.
"The magnitude of that ends up being in kind of the 5 percent of workforce size," Ryan said. "And then we anticipate there are a couple of opportunities for cost rationalization and simplification from a site perspective that we will also be engaging in."
The company did not give details for any potential site closures.
The MTS unit, which includes its Milacron injection molding technology, DME mold components and Mold-Masters hot runner brands, reported that first-quarter fiscal year sales dropped 16 percent to $205 million from the same period a year earlier. The company's first quarter ended Dec. 31.
"We had seen several quarters where we were pretty flat in terms of the order demand," Ryan said. "We saw a little bit of a dip in the last quarter, specifically in the areas of consumer goods, electronics, some of those areas, which have typically been strong. We have not seen the bounce back in China, in North America, that we might have anticipated.
"At this point, there continues to be a lot of fighting for volume in that space, both in the injection molding and hot runner side of the business," she said. "That's one of the areas that has given us a little concern and has caused us to move ahead with some of the things we needed to do from a cost standpoint."
Ryan said the MTS business is below expectations in both units and margins.
"We did close a few larger projects in January, but we've yet to see an improvement in the overall trajectory of market demand as customer investments remain pressured by elevated interest rates, low machine utilization and uncertainty in customer consumption patterns," she said.
Restructuring in MTS is expected to generate annual run-rate savings of $15 million. About half the savings will occur in the 2024 fiscal year along with an incurred charge of about $20 million.