Thomas & Betts Corp., Memphis, Tenn., a maker of electrical components and industrial heating and cooling units, said it planned to consolidate its manufacturing facilities and cut 1,000 jobs as part of a plan to reduce costs and improve productivity.
Thomas & Betts currently has 30 manufacturing facilities and about 6,000 people serving its electrical products business in the United States, Europe and Mexico. At the conclusion of the program, the company expects to have reduced the number of facilities by about one-third and head count by about 1,000 people in these regions.
When completed, the ongoing pre-tax savings from the plan are expected to be about $45 million to $50 million annually. The plan is expected to be completed by the end of the third quarter 2002.
Thomas & Betts said that the need to overhaul its core electrical products manufacturing business came from strategies undertaken during the mid-to-late 1990s. Acquisitions during this period were not optimally integrated, and at the same time, the company's push into business-to-business electronic commerce shifted focus and capital resources away from manufacturing.
The company expects to record about $80 million to $90 million in pre-tax charges related to these actions, primarily in the fourth quarter, but with a portion to be taken in 2002. Total cost of the program is $100 million to $110 million, with the charges primarily for severance, consulting fees, equipment moves, exit costs and asset write-offs.
Assuming a general economic recovery in the second half of 2002, Thomas & Betts expects to report a net profit in 2002, but a net loss in the first quarter of 2002 with sales down by 10% to 15% from a year earlier.