Russell Restructures Operations
Atlanta-based Russell Corp. is restructuring in order to streamline its operations and improve
its competitive position. Russell anticipates the after-tax restructuring cost will be $45 million
to $52 million, with savings to be fully realized by 2008.
The restructuring, along with improved asset utilization and efficiency and focused marketing efforts, is expected to increase sales, profit margins and profitability. The company expects to realize these goals by continuing to shift textile and apparel manufacturing offshore, expanding its facility in Honduras and eliminating higher-cost operations elsewhere; eliminating all Huffy Sports backboard domestic production and moving that production offshore; and reducing overhead costs by reorganizing sales and marketing within the Russell Athletic Group, and cutting corporate and division jobs.
In all, the action will eliminate approximately 2,300 jobs globally, including 1,700 in the United States. Approximately 1,200 of these positions will be replaced in Honduras and Mexico.
“We are making these structural changes in our businesses to remain competitive in today’s global marketplace,” said Jack Ward, chairman and CEO. “These changes will result in our having fewer, larger facilities. We must move quickly to achieve lower costs, both in our operations and our support areas.”
The company also will freeze its current benefit plan and improve its 401(k) employee savings plan as of April 1, 2006.
Russell’s fourth quarter (Q4) 2005 sales were 6.2 percent higher than in Q4 2004. Sales for the year were 10.5 percent above year-earlier sales. Gross profit margins were slightly lower than previous margins — 28.2 percent for the quarter compared with 29.1 percent a year earlier, and 27.4 percent for the year compared with 28 percent previously. The company realized most of its profits in lower-tax countries, notably in its Latin American manufacturing operations.