Black & Decker lays off 70 in Towson

Manufacturing chief among those let go

October 20, 2006|By Allison Connolly | Allison Connolly,Sun reporter

In a shake-up at its biggest division, Black & Decker Corp. has dismissed the head of manufacturing for its power tools business and laid off about 70 salaried employees, mostly at its Towson headquarters.

The company blamed the slowing housing market and increasing competition for the restructuring.

The moves come a week before the company announces third-quarter results. In July, the company warned investors that earnings for the year would be lower than expected. It blamed not only the slumping housing market - 20 percent of company sales are tied to homebuilding - but also an additional $95 million it had to spend on raw materials as costs spiked.

The power tools segment accounted for nearly three quarters of the company's $6.5 billion in sales last year.

In a memorandum sent to employees yesterday and obtained by The Sun, the power tools segment's top two executives, Thomas D. Koos, president of the Consumer Products Group, and John W. Schiech, president of the Industrial Products Group, said measures taken earlier in the year to control spending weren't enough.

"We are in an extremely competitive marketplace and dynamic global economy, and the current environment mandates that we be more aggressive than we have in the past," they said in the memo.

Schiech did not respond yesterday to a call seeking comment.

The affected employees were notified yesterday. They will receive undisclosed severance packages and job transition counseling, the memo said.

On Tuesday, the company fired Robert B. Schwarz, 58, vice president of manufacturing for the Industrial Products Group, which includes professional and consumer power tools and accessories.

"We decided to streamline a bit, and the decision was made to let Bob go," Black & Decker spokesman Roger A. Young said yesterday.

Schwarz joined Black & Decker in 1993 as vice president of manufacturing services, according to his profile on the company's Web site. He oversaw various manufacturing operations for the power tools and accessories group in the Far East, Europe and North America until 2000, when he took over worldwide responsibility for manufacturing of the DeWalt brand of professional tools. He was named to his most recent position in 2004.

Before going to Black & Decker, Schwarz was a vice president at General Electric Co.

The company, which employs 27,200 people worldwide, has been consolidating plants and reducing its work force over the past several years while making acquisitions.

In October 2004, the company announced that it would eliminate 700 jobs and close two factories after paying $775 million in cash for Pentair Tools Group. The previous year, the company moved jobs overseas and closed some factories, including one in Easton that made DeWalt drills, to save money.

Bob Goldsborough, vice president of research at Chicago-based Ariel Capital Management LLC, Black & Decker's largest shareholder as of June 30 with 4.3 million shares, said he hadn't heard about the layoffs as of late yesterday but wasn't overly concerned about the company's health. He said Black & Decker historically has been cost-conscious.

"It's not really surprising when there has been difficulty in the housing market that management is looking to make their operations more efficient," he said.

During a conference call June 26 with analysts, Chief Financial Officer Michael D. Mangan said he expects stronger sales in the fourth quarter, which is typically the busiest for power tools.

The layoffs come as the company is rolling out its 36-volt line of cordless, battery-operated power tools, which features a lithium-ion battery designed by a Cambridge, Mass.-based technology firm affiliated with the Massachusetts Institute of Technology.

That battery is at the center of a patent dispute, but the tools have been on store shelves since June. The company expects the line to generate $50 million worth of sales this year. The line had grossed about $20 million as of the June 26 call, Mangan said.

The company is scheduled to hold its third-quarter earnings call Thursday.

Shares of Black & Decker gained 49 cents yesterday to close at $85.73 a share.

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