UPDATE: OCTOBER 23, 2018 LAYOFF DANGER INCREASES WITH APPOINTMENT OF NEW CEO
In a move that may not bode well for employees, it appears that Kimberly Clark will be switching executives in the middle of its current restructuring program. Current President and Chief Operating Officer Michael Hsu is set to become the CEO which may mean that the Kimberly Clark’s Board was dissatisfied with the progress of the restructuring.
It is not unusual to find new CEOs doubling down on structural changes, especially headcounts, because they can blame the outgoing executive team. Time for employees to increase their vigilance.
UPDATE: OCTOBER 2, 2018 NOTHING HAPPENED — VOTE POSTPONED TO NOVEMBER 2018
The leadership of the Wisconsin State Legislature has postponed a vote on the proposed $100 million incentives package for Kimberly-Clark. The vote will occur in November after the mid-term election. Kimberly Clark agreed to extend the deadline, probably under the pressure of a potential public condemnation for their lack of effort to save jobs.
UPDATE: SEPTEMBER 26, 2018 WAITING ON THE STATE LEGISLATURE
The company announced “the closure of the Neenah Nonwovens Facility and its roughly 100 jobs — around mid-2019 if the company’s original global restructuring plan timeline holds true.” a second plant representing an additional 500 jobs will also be shuttered if the legislature does not meet the company’s self-imposed deadline of September 30, 2018 to pass legislation providing $100 million in tax incentives.
UPDATE: AUGUST 17, 2018 STATE OF WISCONSIN ATTEMPTING TO SAVE 600 JOBS
In February 2018, Kimberly Clark announced that it would be closing two Wisconsin plants and laying off approximately 600 workers. The union stepped-up to offer concessions in an attempt to keep the plants open.
Now it appears that the state of Wisconsin, through its Wisconsin Economic Development Corporation, is attempting to save 600 Kimberly Clark jobs by offering the company an incentive package worth up to $100 million. It is unknown if the public will accept such a blatant attempt to politicize employment within a state with a healthy economic environment and which smacks of the type of "central planning" that allows politicians to choose winners and losers, sometimes disadvantaging the competition who lacks access to such generous state benefits.
Many believe that it would be more advantageous to allow the plants to close and to use a fraction of the proffered funds to re-train workers for better jobs elsewhere in the economy.
Kimberly-Clark, the Texas-based multinational personal care products behemoth and maker of such iconic brands as Kleenex, Kotex, Cottonelle, Scott, and Huggies, will be FORCEing out approximately 5,500 employees in a company-wide restructuring.
The restructuring plan is part of the FORCE (Focused On Reducing Costs Everywhere) which is targeted to reduce costs by $1.5 billion by 2021. In addition to eliminating approximately 13 percent of its workforce and 10 manufacturing facilities, look for the ripple effect to swamp various contractors and vendors that rely on Kimberly-Clark for a substantial portion of their revenue.
According to a press release aimed at Kimberly-Clark investors, Chairman and Chief Executive Officer Thomas J. Falk announced:
"In 2017, we delivered bottom-line growth in a challenging environment. We also achieved all-time record FORCE cost savings of $450 million and reduced discretionary spending to help offset inflationary cost headwinds. In addition, we returned $2.3 billion to shareholders through dividends and share repurchases."
"Although we expect market conditions will remain challenging in the near-term, we plan to deliver better results in 2018 while we begin to implement our new restructuring. We expect organic sales to return to growth while improving our margins and delivering double-digit growth in adjusted earnings per share. In addition, we will increase investments in our brands, our growth initiatives and the capabilities we need for long-term success. We will also continue to allocate capital in shareholder-friendly ways."
"We believe that, over time, our 2018 Global Restructuring Program will accelerate our return to delivering on our long-term growth objectives. This is the biggest restructuring we have undertaken since the introduction of our Global Business Plan in 2003, and it will make our company leaner, stronger and faster. The changes we are making will improve our underlying profitability, provide more flexibility to invest in growth opportunities and help us compete even more effectively. At the same time, we are expecting our ongoing FORCE program to continue to deliver significant results and are making that clear by establishing a multi-year commitment to this program. Combined, our restructuring and FORCE programs will generate more than $2 billion of total cost savings over the next four years, giving us substantial funds to drive profitable growth. Today's announcement is the latest example of Kimberly-Clark's proactive and strategic approach to improving our business so we can win in the marketplace and create long-term shareholder value."
To be noted, more people are accepting of private-label branding (manufactured by name-brand companies) and purchasing large quantities of personal care products at big-box discount stores which reduces the number of purchases and increases the exposure to private-label equivalents.
Additional details of finances and the restructuring plan can be found on the Kimberly-Clark investor website.
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