Husqvarna Announces Personnel Cuts

Sept. 19, 2008
Stockholm, Sweden-based Husqvarna last week said it will cut back staff and adjust capacity at its plant in Huskvarna, Sweden, as a result of lower sales and a substantially reduced production rate.

Stockholm, Sweden-based Husqvarna last week said it will cut back staff and adjust capacity at its plant in Huskvarna, Sweden, as a result of lower sales and a substantially reduced production rate. The company also announced that its operating income for the third quarter will be substantially lower than in the previous year. The decline refers primarily to consumer products for the mass market channels in North America and Europe, as well as to products for the construction industry within Professional products.

Operating income for the third quarter of 2008 is expected to amount to approximately SEK 300 million (about U.S. $44.6 million).

As a result of efficiency gains, synergy effects of acquisitions, and expectations of continued weak market conditions, personnel cutbacks will be implemented. The cutbacks are aimed at reducing the fix-cost structure, and refer mainly to white-collar workers and other staff. The cutbacks will also include adjustment of capacity at the plant in Huskvarna, Sweden, as a result of rationalization and the relocation of some production to other units within the group. This is in addition to the normal seasonal adjustment of the blue-collar workforce.

The measures are estimated to involve a total reduction of about 850 employees, of which approximately 300 are located in Huskvarna, and will generate annual savings of approximately SEK 300 million (U.S. $44.6 million). The cost of these measures is estimated at approximately SEK 300 million.

The measures will be implemented this fall and the first quarter of 2009, following negotiations with relevant labor unions. The savings will be achieved gradually during 2009 and take full effect as of the third quarter of 2009, the company says.

“The third quarter marks the end of the gardening season, and the effect of a weak season has a strong impact on this quarter,” said Bengt Andersson, president and CEO. “The group’s performance should always be considered over the full season. But we have also noted greater caution on the part of our professional customers, especially in the construction industry.

“I regret that we have to implement personnel cutbacks. But we have to realize the effects of rationalization, and also adjust to prevailing market conditions. We will not build up inventories in anticipation of the coming season to the same extent as last year. However, our listings with the major retailers for 2009 look very good so far, as do opportunities to achieve margin improvements through price increases.”

Husqvarna is an international producer of lawn mowers, chainsaws and portable petrol-powered garden equipment such as trimmers and blowers. The Group is also a world leader in diamond tools and cutting equipment for the construction and stone industries. Net sales in 2007 were SEK 33.3 billion (U.S. $23.3 billion).