Snap-On to Fire 1,000 Workers, Close 5 Plants
Snap-On Inc., a leading toolmaker for mechanics, said it will fire 1,000 employees, or 8.3% of its work force, close five plants and take a $175-million third-quarter charge to improve efficiency after making 17 acquisitions in six years.
It also said its second-quarter earnings will be 40% lower than the year-earlier 63 cents a diluted share on lower demand in Asia and lower productivity as employees learn a new computer system.
Earnings for the third quarter will also decline by 10% from the year-earlier period’s 57 cents, Snap-On said.
Kenosha, Wis.-based Snap-On expanded through acquisitions while trying to become a one-stop supplier to repair shops and auto makers. In a race against Muskegon, Mich.-based SPX Corp., analysts say, Snap-On emphasized growth rather than efficiency.
Snap-On will also close five warehouses and as many as 45 small offices in North America and Europe. It will drop 5,000 product variations, about 10% of its total.
The company expects the moves to create savings of about $30 million in 1999 and $60 million in 2000 and beyond.
Snap-On shares fell $3.50 to close at $34.94 on the New York Stock Exchange after hitting $34.38, a 52-week low.