Kemet Corp.(KEM) said that it is eliminating about 1,500 manufacturing jobs representing approximately 14% of the Company's total workforce. The job reductions will begin immediately and be completed by mid-January 2009. The total cost savings from these actions will be approximately $4.0 million per quarter or $16.0 million annually. There will be a one-time implementation charge of approximately $2.0 million which will be accounted for in the current fiscal quarter, ending December 31.
The Company will extend its normal holiday plant shut-down schedules at many of its manufacturing facilities between December 23, and January 5, 2009.
The Company also announced that it will impose a ten percent reduction in pay for all salaried employees effective January 1, 2009, excluding those on a commission based salary.
In the U.S., the Company will also temporarily suspend its 401(k) matching percentage, reducing it from six to zero. Permanent reductions will also be made in several retiree benefit programs.
Salary reductions for affected employees are expected to be restored when the financial performance of the company returns to acceptable levels. There is no implementation cost associated with the salary and benefits reductions. Savings from these initiatives will be approximately $1.0 million per month.
Total cash savings to the Company from all of these initiatives will be approximately $7.0 million per quarter commencing in February 2009, after severance expenses are paid in January 2009.
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