Brunswick accelerates downsizing with four plant closures and loss of 1,450 jobs
By IBI Magazine
Brunswick said today that its previously announced initiative to downsize the company has been accelerated due to "extraordinary developments" in the global financial markets. Brunswick said it will close three US Marine plants permanently, and "mothball" another facility in Navassa, North Carolina. The closures would result in the elimination of 1,450 jobs. "From the start of the year, we've experienced a 3,500-point drop in the Dow, mortgage and housing crises, record prices for oil, and, now, shrinking credit availability for companies and individuals," said Dustan McCoy, Brunswick chairman and CEO, in a statement. "The poor economy and the accompanying weak consumer sentiment have pressured marine markets, eroding the demand for boats and engines these past few months at a swifter pace than originally anticipated." Brunswick said US Marine's manufacturing facilities in Pipestone, Minnesota, Roseburg, Oregon, and Arlington, Washington, would be closed by the end of this year and a fourth facility in Navassa, North Carolina, that builds Bayliner and Maxum cruisers would be "mothballed" by early 2009. Production will be transferred to other facilities. Sea Ray is also suspending production at three plants near Knoxville, Tennessee, from the week of October 27 through the rest of 2008. "In these difficult times as we move into the slowest selling season in the marine industry, it is clear that we must aggressively support our dealer network as they cope with the effects of the economic turbulence," said McCoy. "We remain on target to reduce fixed costs by $300 million by the end of 2009 compared with 2007 spending levels, and expect to exit 2008 with more than $125 million of fixed-cost reductions implemented. In fact, actions completed or currently under way will deliver about $75 million of cost savings this year." The plant closures, added McCoy, will result in "significantly lower sales" in the fourth quarter. "Given the effect of lower fixed-cost absorption on these reduced sales in the remainder of 2008, we are no longer confident of achieving our goal of posting positive earnings for the full year, excluding restructuring and impairment charges," said McCoy. A Brunswick spokesman said that, despite the closure of four US Marine facilities, all brands will remain in existence. US Marine continues to manufacture boats in Cumberland, Maryland and Reynosa, Mexico. Brunswick's stock closed yesterday at 8.120, down 18.8 per cent. As of 10:40 ET, it was trading at 8.08, having dipped to a 52-week low of 7.40 earlier in the day.
(10 October 2008)
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