The Timken Company, based in Canton, Ohio, announced Monday that it will implement a new plan to improve the company's efficiency and to reduce costs. James W. Griffith, president and CEO, said the upcoming changes are meant to increase competitiveness in today’s global markets and to enable the firm to manage the challenging economic times.
As a result of this realignment plan, which includes adjustments to workforce and output, the company forecasts pretax savings of $30 to $40 million in annual selling and administrative costs. These savings are to start immediately and to be completed by the end of the third quarter.
Though the company has already cut production and trimmed its manufacturing workforce by 2,500 over the last 15 months, as part of the new strategy, it will further reduce its salaried workforce by an additional 400 in 2009. Timken also said that it has been trying to match its output to the current demand also by reducing operating hours and by shortening work weeks, and will continue to implement additional permanent adjustments to better align output to demand.
“We’re balancing capacity through reduced labor and output,” Mr. Griffith said. “Our focus now is to align our administrative and sales functions to be more effective in today’s challenging environment. As we operate with a leaner organization, we will continue to focus on improving profitability and cash flow."
The impact of the company’s savings plan was included in the January’s earnings estimate for 2009 and full-year savings will be achieved in 2010.