RACINE, Wis. – Twin Disc, Inc. will reduce operating expenses through a number of cost-cutting initiatives because of declines in demand for its products and current economic and market uncertainty at its domestic and international operations. The company’s management estimates the cumulative savings to be $25 million for fiscal year 2010, Twin Disc reported in a recent release.
The cost-cutting measures include a reduction of annual base salaries of the company’s salaried employees including all executive officers, removal of the fiscal 2010 bonus/incentive plan, changes to several benefit programs, an across-the-board reduction of marketing, advertising, travel and entertainment expenses and staff reductions and layoffs.
Through a combination of an involuntary reduction in force and a voluntary separation program, the company will reduce its workforce by 16 salaried employees and 20 hourly employees at its Racine, Wis., operations. It will also be implementing rolling layoffs for its Racine workforce throughout fiscal year 2010 and will be closing its Racine manufacturing facility for the month of July 2009, the company said.
These measures supplement additional layoffs and cost cutting measures being implemented at the Twin Disc’s European operations in Belgium, Italy and Switzerland. The company will be offering outplacement and transition benefits to affected employees.
As a result of these cost-reduction programs, Twin Disc expects to incur costs of severance and similar personnel-related expenses aggregating approximately $1.4 million, which will be accrued in the fiscal 2009 fourth quarter.
“Like many global manufacturing companies today, the breadth of the economic recession has impacted all facets of our business,” said Michael E. Batten, chairman and CEO. “While it appears that the recession is beginning to moderate, the underlying market trend has softened and has resulted in slowing sales, order rates and backlog.
“We believe that proactively implementing these cost-control initiatives will enable us to effectively address the global economic downturn and ensure a strong financial position in the future. We recognize that the layoffs will be difficult for the affected employees and their families. While we wish we didn’t have to take these difficult actions, they’re unfortunately necessary to secure Twin Disc’s short- and long-term stability and success.
Batten said that in spite of the changes Twin Disc is making, the “fundamentals of our business remain strong.” And he said the company remains confident in its long-term viability and “remains committed to our employees, customers and the markets in which we operate.”