Newell Rubbermaid to cut up to 1,000 jobs

Three months ago, state officials were heralding Newell Rubbermaid’s expansion plans in the state, which promised to bring scores of jobs to Georgia. Those plans remain, but Sandy Springs-based Newell says the deepening recession is now forcing it to cut hundreds of jobs worldwide.

The company’s actions follow its retail partners’ ratcheted-down sales expectations as consumers take a tight-fisted, spend-little approach to the recession. Now, the economic pall that’s forced some retailers into bankruptcy is casting its shadow over suppliers like Newell.

Newell said Wednesday it plans to cut its managerial and professional staff by 8 percent to 10 percent, or 800 to 1,000 employees. The company nixed pay raises next year for its remaining professional staff as well as hourly workers, who comprise half of Newell’s global workforce of 20,000.

The consumer products giant cited a severe pullback in U.S. consumer spending and the global recession.

Newell, which sells everything from strollers and storage containers to pens and cookware under various brand names, also slashed its fourth-quarter earnings forecast.

Its board will decide at its February meeting whether to cancel executive bonuses for 2008.

Newell’s stock price plunged 27 percent, or by $3.60 on the news, closing at $9.58 per share Wednesday — a level not seen since Oct. 11, 1990.

The cuts will be a mix of layoffs and eliminations of unfilled jobs across all divisions. Seperately, the company announced the resignation of James J. Roberts, executive group president of the office products and cleaning and organization and decor units. Roberts had been with the company since 2001. Mark Ketchum, Newell’s president and chief executive will assume his duties temporarily.

The reductions will include about 45 to 55 of the 550 positions at the headquarters, spokesman David Doolittle said.

Affected employees will be notified in the first quarter of 2009.

“The world has changed very significantly just within the last few weeks,” Doolittle said. “That’s why we have to take strong action to position the company for what we believe will be a prolonged downturn.”

It’s a sharp turn of events for the consumer products giant, which only in September had a splashy announcement with Gov. Sonny Perdue touting the official opening of its $100 million, Glenlake Parkway building.

As part of that announcement, Newell, whose brands include Rubbermaid, Sharpie, Graco, Calphalon, Levolor and Irwin Tools, also said it would relocate its baby and parenting business to Sandy Springs, creating 200 jobs by the end of next year. Though half of those jobs are expected to be filled by employees relocating from that division’s Exton, Pa., operations, the remainder would be staffed through hires from metro Atlanta’s labor pool.

And Newell said it would create another 200 jobs in Union City for a planned 800,000-square-foot Southeastern distribution center. That center will have a full staff of 300, but 100 of those positions will be relocations from Newell’s distribution facility in Columbus.

Doolittle said both initiatives are unaffected and that the company is committed to its long-term staffing growth for metro Atlanta.

Still, the recession that started with the implosion of the U.S. housing sector is wreaking havoc on the finances — and spending ability — of consumers who have been hit with rising unemployment and lenders restricting credit.

The weak retail environment underscores just how important the American consumer is to the U.S. economy. Consumer spending accounts for about 70 percent of U.S. economic activity. But with Americans refraining from spending, retailers are hurting, squeezing companies like Newell that stock store shelves with products.

In recent weeks, Macy’s Inc. reported a 14 percent drop in sales for the four weeks ended in November compared with the same period in 2007. Its’ high-end Bloomingdale’s chain sells Calphalon. Target Corp., which carries Newell’s Paper Mate pens and Graco baby swings, said its sales for the same period dropped 6 percent.

Both retailers blamed the loss of seven fewer post-Thanksgiving holiday shopping days and the economy.

But some of Newell’s other retail partners reported more dire news. Office Depot Inc. in October announced plans to close 112 of its underperforming stores in North America. Linens ‘n Things, which filed for bankruptcy protection in May is now in liquidation.

The grim retailing landscape explains why Newell sharply cut its forecast for fourth-quarter earnings to between 6 and 10 cents per share, compared with an earlier forecast of 29 to 34 cents per share.

“We are seeing extraordinary volatility, weaker than expected demand and customer inventory reductions across virtually all geography and market segments, with trends worsening as we near the end of our fourth quarter,” Ketchum said in a statement. “The unprecedented rapidity of the economy’s decline makes it difficult to anticipate an economic rebound any time soon. Our expectations are for a more challenging business environment in 2009 than any we’ve seen to date.”