Singer tries to mend itself with shutdowns and firings Goodman will replace Ahmed as president


December 05, 1997|By BLOOMBERG NEWS

HONG KONG -- Singer Co. said yesterday that it will close factories and fire about 6,000 workers, or 28 percent of its staff, in a bid to cut costs and compete with rivals' cheaper sewing machines.

The company also ousted Iftikhar Ahmed as president because FTC of Singer's poor performance. He will be replaced by Stephen H. Goodman, 53, who was a Singer executive before he joined Bankers Trust New York Corp. in 1986.

Singer lost market share the past two years to Brother Industries Ltd. and other companies as it boosted prices on its machines. Singer's problems accelerated in July when some Asian currencies, led by the Thai baht, suffered big declines against the U.S. dollar. The drop hurt Asian sales, which account for a third of Singer's revenue.

"People buying Singer products are going through an economic nightmare and that's affecting demand," said John Potter, co-manager of M&I Investment Management Corp.'s Marshall Mid-Cap Value Fund, which holds about 114,000 shares.

Singer's stock, which has plunged more than 50 percent since July, rose $1.9844 yesterday to $13.2969.

Singer said it will eliminate 5,531 manufacturing jobs and 437 marketing jobs as it trims excess capacity. Goodman said the company is closing three plants or cutting personnel in Germany, Japan and southern Brazil.

The company will move production to facilities in northern Brazil, Russia and Shanghai, China, said Goodman. Singer has factories in Mexico, Brazil, Turkey, Taiwan and Germany and operations in 140 countries.

The moves will save the company money. Workers in the new locations will make $3,000 to $4,500 a year, compared with pay of as much as $65,000 in some existing locations, Goodman said.

Singer estimates that the restructuring will reduce its costs by $104 million annually after it is completed in about three years.

"The cost structure had gotten somewhat out of line," said Goodman. "The currency crisis in Asia has impacted Singer's markets there and brought to the fore some difficulties the company was having."

The company will take a pretax charge of $186 million in the fourth quarter, mostly as severance payments. Singer plans to pay for the restructuring and $76 million in new investments by selling land and buildings for after-tax proceeds of about $220 million.

Goodman said Singer expects to report 1997 net income of $21 million, or 41 cents a share, before the charge. That implies a fourth-quarter loss before the charge of about $9.7 million, or 19 cents a share.

Singer expects a 1997 loss of $160 million after the charge, Goodman said. It earned $29 million, or 56 cents a share, in 1996.

Singer's share of the consumer sewing machine market fell to 39 percent this year from about 41 percent in 1995.

Pub Date: 12/05/97

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.