As part of a global restructuring, Newell Rubbermaid, the Sandy Springs company that makes Sharpie markers and Calphalon pans, is laying off 2,000 people worldwide, including an undetermined number in Atlanta.
The layoff announcement is the second in a year for Newell Rubbermaid, one of Georgia’s largest publicly traded companies. It is profitable — it made $108.3 million in a three-month period that ended in September — and is increasing its dividend, or its payout to shareholders, by 50 percent.
But the company sees a path to more profitability and more growth. By laying off 10 percent of its workforce, Newell Rubbermaid will find between $180 and $225 million annually to invest back in the company, president and CEO Michael Polk said.
“We’re streamlining the structure of the company,” he said. “In the process, there will be change, there will be people affected.”
This cut will take place over two and a half years.
The Newell Rubbermaid layoffs are an effort to reduce redundancies in a company that was long run as a group of separate operations and is trying to remake itself as a united business. The company is flattening and simplifying its management structure and reducing some layers. Instead of separating businesses by categories — Newell Consumer, Newell Professional and Baby and Parenting — Newell Rubbermaid will be organized by Development and Delivery in its new strategy.
That means some of the jobs lost in metro Atlanta will be high-paying ones. Already, the company has let three executives go and announced some outside hires.
It’s the latest step in a restructuring that began a year ago, when Newell Rubbermaid announced 500 job cuts that would save between $90 and $100 million. Those savings should come on schedule, Polk said.
The money saved in both job cuts will be reinvested to drive more sales of products in Asia and Latin America, Polk said, where there are opportunities to grow faster.
“The reason to do this is to build a stronger company,” he said. “This should make it faster growing, stronger, more global and more profitable.”
Polk called the move “a big swing” for Newell Rubbermaid. Bill Chappell, an analyst for SunTrust Robinson Humphrey, said Polk has been scouring the business to find places to cut in order to reinvest in Newell Rubbermaid as quickly as possible.
While Newell Rubbermaid’s is the largest recent layoff announcement for an Atlanta company, other companies have announced similar restructurings over the past several weeks, Chappell said. Colgate-Palmolive is laying off 6 percent of its workforce, it said this week, and DuPont announced 1,500 layoffs in the next 18 months. Other companies that have announced recent cuts include Ford, Dow Chemical and Advanced Micro Devices.
Delta Air Lines has made significant cuts this year, with 2,000 workers taking early retirement offers in the spring and the airline shutting down its Cincinnati-based regional flight subsidiary Comair, which had 1,700 employees, in September. In 2009, Duluth-based NCR announced it would lay off 10 percent of its 22,000-person workforce, and UPS laid off 1,400 people in 2007.
Even in good times, companies lay off people in bulk as they sell off some businesses or demand for their products changes. Over the past year and a half, the number of layoffs nationally has been down to pre-recession levels of about 1.8 million a month, said Heidi Shierholz, an economist with the Economic Policy Institute.
The number of mass layoffs announced recently, though, is up. Although the number of September job cuts, 33,816, is the lowest since 1997, it was 4.9 percent higher than the number for August, according to outplacement firm Challenger, Gray & Christmas.
Poor results from some companies in October has “triggered a heavy spate of layoffs,” said John Challenger, the company’s CEO.
“Certainly in the near term, it seems it will get heavier,” he said. “Certainly, it’s more visible.”
As more companies lay off workers as they search for more profitable growth, the nation’s slow recovery could be hampered, said Anastasia Christman, a senior policy analyst with the National Employment Law Project.
Christman said the recent mass layoffs have been across a number of industries and the timing could lead the recovery to backslide, even as companies sit on piles of cash.
“There is a pattern of upticks in mass layoffs, and it is something to be concerned about,” she said. “It’s a cycle. As there are more mass layoffs, people may hold back even more.”