UPDATE: Brunswick Trims Output As Boat Sales Idle
By Bob Tita Of DOW JONES NEWSWIRES CHICAGO -(Dow Jones)- Brunswick Corp. (BC) announced Tuesday a series of production cuts and layoffs as the boat and recreational equipment maker grapples with the downturn in consumer spending.
The moves include idling some of its U.S. plants for one week a month through June. Another plant, which makes Sea Ray brand boats near Knoxville, Tenn., is being "mothballed" pending any recovery in demand.
Brunswick shares closed up 13.1% at $5.91. The stock has shed nearly two-thirds of its value over the past year as the weakening global economy has hit big-ticket discretionary purchases.
The Lakeview, Ill.-based company derives two-thirds of its revenue from recreational boats and engines - 30% of that from overseas - and suffered a 40% slide in sales during the third quarter.
Brunswick also produces pool and billiards tables and fitness equipment and operates a chain of bowling alleys.
Analysts expect full-year 2008 sales to fall to $4.85 billion from $5.61 billion in 2007 amid declines at its other business units.
The production cuts are part of efforts to shave $300 million from its fixed-cost base by the end of the year. It is cutting the number of North American plants to 14 by the end of 2009compared with 29 in 2007.
It is mothballing its Riverview, Tenn., plant during the first quarter, with production moved to facilities in Knoxville, Vonore, Tenn., Palm Coast, Fla., and Mexico.
Brunswick employs 1,500 staff in the Knoxville area and said it would seek to find roles for the 300 affected by these moves.
The company also intends to cut 275 additional positions at its Sea Ray manufacturing and product-development facilities in Knoxville and Florida by Friday.
Brunswick declined to comment on how close the company is to reaching the goal of cutting $300 million from its fixed-cost base. "We've got an overall strategy to shrink our North American footprint," said Daniel Kubera, a company spokesman. "It reflects the challenging marine marketplace."
-By Bob Tita, Dow Jones Newswires; 312-750-4129; robert.tita@dowjones.com
(John Kell contributed to this article)
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Publié le 06 janvier 2009 Copyright © 2009 Dowjones
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