Wednesday, Graco Inc. (GGG), said it has decided to cut its workforce by 6% or approximately 150 positions, owing to the impact of global recession on its businesses, reflected by lower incoming order rates for the fourth quarter.
Patrick McHale, President and Chief Executive Officer of Graco, noted that incoming order rates for the fourth quarter have fell 15% to 20% from the comparable 2007 levels.
"We must take the difficult step of reducing our workforce and adjusting our cost structure to meet the current realities of our business. We regret the impact on our employees", the CEO said.
Following the 6% reduction in workforce which is expected to be completed by early 2009, the company said it will incur a pretax charge of approximately $5 million related to severance and early retirement costs in the fourth quarter of 2008.
Impairment charges are estimated to total $4 million in the fourth quarter as the decline in business levels is reflected in the review of intangible assets.
In addition to the job cuts, the company said it is also working on other options such as reducing capital expenditures and discretionary spending to further control costs.
Also included in the fourth quarter, are earlier announced additional expenses of $3 million associated with the roll-out of entry-level paint sprayers to additional paint and home center stores.
GGG ended Wednesday's regular trading at $22.29, down 2.28% or $0.52, on a volume of 950,409 shares on the NYSE.
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