BENTON HARBOR, Mich. — Whirlpool Corp. is planning to cut approximately 5,000 jobs by the end of 2009 because of the global credit crisis and the company’s expectation for continued reduced demand in North America and Europe, the company reports.
“The global credit crisis has had a profound negative impact on what was already a weakening and very fragile global economy,” says Jeff M. Fettig, chairman and chief executive of Whirlpool. “Declining home values, rising unemployment and very low consumer confidence levels will likely prolong a negative-demand environment, at least through the middle of 2009.”
Whirlpool’s earnings fell 7% during the third quarter on lower global unit volumes and higher material costs, the company adds. The company earned $163 million, or $2.15 per share, for the quarter, compared to $175 million, or $2.20 per share, a year earlier.
Whirlpool said it now expects a profit of $5.75 to $6 per share for 2008, compared to its previous estimate of $7 to $7.50 per share.
Based on its revised earnings expectations and the negative industry outlook, the company says it now expects to generate free cash flow of $50 million or less for the full year, down from its previous estimate of $500 to $550 million.
The job cuts include positions eliminated from plant closings that the company already announced this year along with new reductions taking place through the end of next year.
Since January, Whirlpool has announced the closure of four plants in LaVergne, Tenn.; Oxford, Miss.; Puebla, Mexico; and Reynosa, Mexico — a loss of about 2,000 jobs.
The company says it will also shutter its facility in Jackson, Tenn., and shift production to its plant in Findlay, Ohio, eliminating about 500 positions. It also will cut approximately 500 salaried jobs across North America, including full-time and contractor positions. Another approximately 1,900 jobs will be cut overseas, mostly in Europe.
The cuts are expected to produce annual savings of $275 million, Whirlpool says. It anticipates restructuring expenses of approximately $170 million in 2008 compared to its previous estimate of $100 million.
“While decisions to eliminate jobs and close facilities are very difficult, they are necessary to create a cost-effective business structure,” Fettig says. “These changes will ensure that our company is proactively taking the necessary steps to adjust its cost structure and production capacity to lower expected demand levels.”