[속보-단독]Emerson unveils $425M cost-cutting plan that eliminates 2,900 jobs

[속보-단독] Emerson unveils $425M cost-cutting plan that eliminates 2,900 jobs

David Farr, CEO of Emerson

EMERSON ELECTRIC

에머슨, 2900개의 일자리를 구조조정후 425만 달러의 비용 절감 계획 발표

에머슨 일렉트릭(NYSE: EMR)은 지난 목요일,여러 산업시설들을 폐세하고 4억 2천 5백만 달러의 비용 절감 계획의 일환으로 2,900개의 일자리를 없앨 것이라고 발표했다..

그러나 퍼거슨에 본사를 둔 자동화 장비와 기타 기술 제품 제조업체는 회사를 해체할 계획이 없다고 말했다.

에머슨 경영진이 연례 투자 컨퍼런스에서 요약한 비용 구조 조정 계획은 수익 증가가 정체되기 시작하면서 작년에 시작된 광범위한 운영 검토의 결과물이다.

데이비드 파르 CEO는 목요일 비용 절감 전략을 발표하면서 에머슨 이사회가 운영 검토를 마치면서 "단기적인 이득을 얻기 위해 피해를 입지 않도록 하는 데 매우 초점을 맞추고 있다"고 말했다.

아울러 이달 초 1분기에 9천7백만 달러의 "비용 재설정 프로그램"을 시작했다고 말하면서 2020 회계연도 비용 구조 조정 중 2억1천5백만 달러를 목표로 하고 있다.

Emerson Electric (NYSE: EMR) on Thursday said it will eliminate 2,900 jobs as part of a $425 million cost reduction plan that also involves closing several facilities.

But the Ferguson-based maker of automation equipment and other technology products said it isn't planning to break-up the company, as was proposed last year by activist investor D.E. Shaw.

The cost restructuring plan, outlined by Emerson executives during an annual investor conference, is the result of a broader operational review launched by the company last year as its revenue growth began to stall.

Then, in October, D.E. Shaw went public in October with demands for a shakeup at Emerson, proposing the company could save $1 billion annually by splitting itself into two distinct units: an industrial automation company and a climate technology-focused company. Emerson said it would conduct a comprehensive review of its operations after news broke of D.E. Shaw’s activism.

In announcing its cost-saving strategy Thursday, CEO David Farr said Emerson's board was “very focused on making sure we weren’t doing damage just to make short-term gain” as it completed the operational review. The company is targeting $215 million of the cost restructuring for fiscal 2020, saying earlier this month it initiated $97 million of "cost resetting programs" in the first quarter.

The focus on savings for Emerson comes as the company operates what it has described as a "no-growth environment," reporting earlier this month that fiscal first-quarter net sales of $4.2 billion were flat. Farr said Tuesday he sees the period of slowdown as an apt time for the company to reset itself.

Here’s three key takeaways from Emerson’s plan for cost savings:

1. A reduced workforce, footprint

Farr on Tuesday described Emerson’s cost savings initiatives as aggressive, highlighting how the company’s plan will reduce both Emerson’s workforce and footprint.

Emerson employs around 88,000 world wide, about 39,000 of which are salaried. The cost-reduction plan is expected to impact about 10% of that salaried workforce, including the elimination of 2,900 positions and another 1,000 that will be relocated to lower-cost areas of the company.

There will be a minimal impact on Emerson’s St. Louis workforce, a company spokesperson said.

The company also said it in the process of closing and consolidating 145 of its manufacturing and sales/services facilities. Farr said the process of trimming the company’s locations will take about 18 months and has already begun.

The process of consolidating locations will be countered by a strategy of investing in its remaining facilities.

“We have to invest in the facilities as we start consolidating and closing facilities. It’s very important for us,” Farr said.

2. No breakup

When D.E. Shaw went public with its criticism, one of its most ambitious proposals was to split Emerson into two companies: an industrial automation company and a climate technology-focused business.

At the time, D.E. Shaw argued that such a split would generate at least 20% upside to Emerson's current share price and move the company out from under what it called a "conglomerate umbrella" that kept each business from realizing full potential.

Farr said Thursday there are no plans for a break up of Emerson. He affirmed Emerson's plan to continue operating under its current structure, but added that the company will continue to “fine-tune” its two divisions — Automation Solutions and Commercial & Residential Solutions

3. Not selling just to sell

As Emerson looks to fine-tune its operations, Farr said it will continue to have a robust acquisition and divestiture pipeline. He emphasized that the company and its board of directors is not in the process of liquidating the company as it cuts costs. However, it continues to look at what products and business lines might make sense to sell.

“We’re in the process right now of selling some small product lines off. We’ll continue to do that,” Farr said. “But we also, as the board pointed out, wanted to make sure that we didn’t just sell assets to sell assets.”

As for M&A, Farr said Emerson’s board wants the company to continue to look for new technologies that can bolster its two major divisions. He said typically there are more than 10 or 15 acquisition targets in front of Emerson’s board at all times.