The Timken Co. (TKR), a provider of friction management and power transmission products and services, Monday announced that it is realigning its organization to improve efficiency and reduce costs. The company expects to cut its salaried workforce by up to 400 positions in 2009, incurring severance costs of approximately $10 million to $15 million.
The company said it has targeted pretax savings of $30 million to $40 million in annual selling and administrative costs. The company expects that the implementation of these savings will begin immediately and essentially be completed by the end of the third quarter. The impact of this cost-saving initiative was included in the earnings estimate for 2009, provided in January, Timken noted. Full-year savings are expected to be achieved in 2010.
According to the company, over the past 15 months, it has lowered production and cut its manufacturing workforce by approximately 2,500 positions. Other steps, such as short work weeks and reduced operating hours, have been taken to better align output to demand. Additional permanent adjustments will be made as necessary to right-size capacity to market needs, Timken stated.
Commenting on the realignment, James Griffith, president and chief executive officer, said, "We're balancing capacity through reduced labor and output."
"Our focus now is to align our administrative and sales functions to be more effective in today's challenging environment. As we operate with a leaner organization, we will continue to focus on improving profitability and cash flow - as we strengthen the Timken brand across the globe," Griffith added.
TKR is trading at $12.01, down $0.16, on a volume of 75,734 shares.
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