The continuing slump in construction has forced debt-heavy Black & Decker Corp. to order temporary shutdowns of assembly plants, including a two-week idling of its 866-worker plant in Easton, the company said yesterday.
The Towson-based power tools giant said the shutdowns, as well as some permanent layoffs at its manufacturing plants worldwide, were needed to cut costs and reduce inventories because of declining sales.
Gregory Nejmeh, who watches the company for investor clients of Shearson Lehman Hutton Inc., said that Black & Decker is especially vulnerable to recession because it must make large payments on the $2.6 billion it borrowed in 1989 to buy Connecticut-based Emhart Corp.
Though the purchase of Emhart, which makes Price Pfister plumbing fixtures, Kwikset locks, True Temper golf club shafts, jar-making machinery and a host of other products, should eventually broaden the company's retail base, it also makes Black & Decker more dependent on the troubled U.S. economy, Mr. Nejmeh said.
Barbara Lucas, a Black & Decker spokeswoman, said the Easton plant, where power tools are assembled, was shut down for one week in February and another in March and will be closed for two weeks in June if sales don't pick up.
She said these were the first shutdowns of the plant in several years.
Ms. Lucas said the company has also instituted layoffs and hiring freezes at other plants in the United States, Britain and Australia.
She declined to say how many of the company's 43,400 workers had been laid off. But she said she doubted there would be further widespread cuts. "Most of the layoffs are behind us."
Ms. Lucas said some big retailers have started reporting a slight upturn in their tool and appliance sales, but so far, Black & Decker's unit sales are down from last year's first quarter level -- and unit sales last year finished 5 percent below those of 1989. Almost all of the decline has been in the U.S. market, which makes up about half of the company's business.
Because of soft sales and continuing large interest expenses, the company said it earned $4.1 million in the first three months of 1991, less than half of last year's first-quarter net income.
Black & Decker is still trying to sell off some Emhart divisions in order to raise cash to pay off its Emhart debt, Ms. Lucas said. Though the company already has closed the sales of two divisions, including the GardenAmerica lawn care products company, so far this year, it still hopes to sell its Brazilian electronics business and other "non-strategic" divisions, she said.
Three montha ended 3/31/91
.. .. .. .. .. Revenue .. .. .. ..Net .. .. .. .. .Share
'91 .. . .$1,087,600,000 .. $4,100,000 .. .. .. ... $0.07
'90 .. .. $1,003,300,000 . $10,000,000 .. .. .. ... $0.17
%change .. .. .. ...+8.4 .. .. . -59.0 .. .. .. ... -58.8