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Dec 11, 2008

Stanley To Layoff 2,000

CT-The Stanley Works is prepping itself for the future. After lowering its projected Q4 numbers, the global tool and security provider will let go of 2,000 workers and plans to close down three manufacturing facilities by the end of December this year. The staff reductions equate to roughly 10% of those currently employed by Stanley.

"We are a company that believe in maintaining a conservative financial posture," says James M. Loree, EVP and CFO of Stanley Works, in a statement. "In light of the extremely poor economic backdrop, it is prudent to continue to take actions to align our cost structure with both the current and potentially worsening business environment in 2009."

Initially, Stanley had predicted earnings per share for continuing operations before Q4 charges to be $0.35 to $0.45 higher than where the company now sees its earnings, somewhere between $3.30 to $3.40 per share. The release from Stanley points to the "rapidly deteriorating business conditions" to its Construction/DIY and Industrial segments over the fourth quarter. The fourth quarter unit volumes are currently projected to be from 12% to 14%, which Stanley notes in their release, is roughly 6% to 8% lower than expected.

Loree in a statement says, "The decline in unit volume that [Stanley has] observed in the first two months of the fourth quarter, following a 7% decline in the third quarter, has been dramatic. Across nearly all of our businesses, with the exception of our Security segment, [Stanley has] seen a sizable negative trend that continues to track the downward movement of the overall economy." He continues to say that the lay-offs and facility closings will "position the company for growth" as the economy improves in the future.

With a caveat that the market is still too volatile for exact predictions, Stanley estimates that the 2009 operating margin benefit of the lay-offs and closings--along with cost actions implemented in mid-year 2008--will result in $195 million. The company predicts that the downturn, however will cause lower revenues for 2009.

Stanley is still finalizing which facilities will be closed, and is not at liberty to discuss the process of evaluating, nor from where the 2,000 employees will be terminated.

Source : GlobeSt
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