Kennametal Inc. is offering buyouts to 1,000 U.S. workers, a fifth of its domestic workforce, as the toolmaker takes the first steps on plans it announced last month to accelerate downsizing because of a slump in the energy industry.
The Unity-based company said it made the voluntary buyout offers to its white-collar employees on Monday. Spokeswoman Lorrie Paul Crum declined to say how many workers the company needed to accept the buyout or how much money it hoped to save from this round of job cuts.
“This really is all about engaging our employees so they can be part of the solution,” she said, adding that getting workers to agree to leave now would “minimize deeper cuts that could be necessary.”
Crum said the white-collar buyouts are separate from a review of manufacturing operations that could lead to further downsizing. She had no update on that review.
In the face of a net loss of $388.3 million in the October-December quarter, Kennametal CEO Don Nolan on Jan. 29 said the company would accelerate previously announced job cuts and plant closings. He said the company would reduce administrative expenses and could sell off parts of its business to bring annual costs down by $90 million to $105 million.
The company has more than 14,000 employees worldwide, including 5,000 in the United States. Crum wouldn’t provide a total number of U.S. white-collar workers. She said the offer included “enhanced benefits” but didn’t provide other details or the deadline for workers to accept it.
Plant closures and layoffs started in December at Kennametal, which is trying to rein in costs as its customers in the energy industry cut spending in response to a collapse in oil prices. The company is closing its Kingston plant in Derry, where 30 people work; a facility in Grant, Ala., which has about 90 employees; and a plant in Switzerland that employs 100 people.
Kennametal makes drilling and cutting tools for manufacturing, construction and energy companies. The company’s expense cuts have targeted its infrastructure division, which includes oil and gas producers and mining companies. Kennametal has said sales from that part of the company are experiencing a “rapid decline.”
But Nolan, who replaced retired chief executive Carlos Cardoso in November, said he was analyzing every part of the company for cost reductions.
“There are no sacred cows in our analysis,” he told analysts in a conference call last month to discuss the company’s earnings.
Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or [email protected].