Snap-on Inc., a Kenosha-based manufacturer of tools and diagnostics equipment, announced a major reorganization plan Monday that will cut 1,000 jobs, or about 8 percent of its payroll.
The $1.7 billion company, located just north of the Illinois border, also plans to close approximately five manufacturing plants, five warehouses and 40 to 45 small offices in North America and Europe.
“The details of the plan have not been finalized,” said Richard Secor, manager of corporate communications. “We are not in the position today to identify specific locations or positions.”
Those specifics should be finalized at a board meeting in August, he said.
Because plans are not yet complete, Secor also was unable to specify which Snap-on product lines might be discontinued.
Snap-on said it will take a restructuring charge of about $175 million in connection with the plan. In addition, it said it expects second-quarter earnings to be about 40 percent below year-earlier profits of 63 cents per diluted share, and said it also expects third-quarter profits to be below year-earlier levels.
Snap-on shares lost $3.50, closing at $34.94, on the New York Stock Exchange.
The layoffs and closings are just one stage of Snap-on’s strategic business plan, known as Project Simplify, which is slated for completion within the next 18 months. Additional plans include discontinuing some product lines, eliminating redundancies and networking its current various computer systems.
“We’ve made 17 acquisitions in the last six years and some of these came with their own structures and administration, so we do have some redundancy in that respect,” Secor said. “Now we can simplify the organization and incorporate shared services where applicable.”
Snap-on employs 12,000 people worldwide, including a small sales office in Chicago.
This type of restructuring is not new for the company, nor is this the first time layoffs have occurred. There was a consolidation in field operations in 1992, when a number of branch warehouses were consolidated into distribution centers and customer service centers were consolidated into regional customer service centers.
For the consumer, the reorganization plan should result in better service, Secor said.
“We believe the simplified organization will improve customer service, make it easier for us to operate internally to better serve our customers.
“The simplification was prompted by the growth in our business, both internally and through our acquisitions. The reduction of that complexity is really what’s driving the plan,” he said.
