Lincoln Electric announces cost-saving measures
Lincoln Electric Holdings Inc. today announced actions to lower its fixed and variable cost structure to align its business with the current economic environment. These measures include the continuation of previously announced reduced work hours, cutting expenses and discretionary spending in all areas, reassigning employees under the company's Guaranteed Employment policy, canceling merit raises, instituting a base salary reduction for its executive management (with overall compensation expected to be reduced by as much as 45 percent), suspending the Company's 401(k) match and offering a voluntary separation incentive program to its Cleveland-based employees.
A voluntary separation program is being offered to all of its approximately 2,900 Cleveland bonus-eligible employees, regardless of years of service. Lincoln also will continue to reduce the number of temporary and contract workers. In addition, the company is releasing those employees who are not meeting performance expectations and is reviewing workers not covered by its Guaranteed Employment policy (employees with less than three years of continuous service and those not meeting performance standards).
The initiatives announced today are in addition to the headcount reductions begun during the second half of 2008 throughout its global subsidiaries.
The combination of ongoing programs and actions announced today are anticipated to result in a greater than 10 percent reduction in the global workforce with an annualized savings of approximately $50 million, excluding any reduction in the profit-sharing bonus.
According to a company-issued release, the company is in a very strong financial position and has a solid track record of good cash flow generation and profitability in slower economic environments. It ended 2008 with a strong balance sheet and cash balances of over $275 million and no net debt.
In the release, company Chairman and CEO, John M. Stropki said, "We are very optimistic in our ability to weather these most difficult economic times. Our strong balance sheet and net cash position will be applied to strengthen our global market position by making opportunistic investments in R&D, strategic investments in capital expenditures and acquisitions. We plan to emerge as a stronger, more capable company, better positioned to address the long-term needs of our global customers and the welding industry."