Textron Inc., the Providence-based maker of Bell helicopters and Cessna planes, announced it will fire 2,500 workers and will suffer an unexpected third-quarter loss because of the worsening economy and production delays in military-aircraft contracts.
It’s the third round of layoffs announced in a year by the company, which hopes to eliminate a total of 7,300 jobs by the end of 2002. The cuts reflect a 12 percent decrease in the total number of Textron employees worldwide.
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The company also announced the firing of John Janitz and elimination of his position as chief operating officer.
Textron CEO Lewis B. Campbell will take over Janitz’s duties. It is not known what impact the layoffs will have on Textron’s approximately 700 employees at its corporate headquarters on Westminster Street and the Textron Financial Corp. unit in the city’s financial district.
Textron officials said where the layoffs will be made has not been determined.
“It’s always possible that some of the layoffs will be in Providence, but I suspect they will primarily be made at the manufacturing locations,” said company spokeswoman Sue Bishop.
Textron’s shares fell as much as 23 percent on Sept. 26, the day the layoffs were announced.
Along with a sagging U.S. economy and the company’s own operational concerns, Textron also cited the Sept. 11 terrorist attacks as having a direct impact on its aircraft divisions. A ban on flights after the assaults halted testing and delayed shipments of helicopters and planes.
Company officials said the attack was a small factor that led to the layoffs for its company, but said the impact of the attack will be felt by companies nationwide.
The terrorist attacks “leave no doubt that the U.S. is entering a recession of undetermined length,”‘ Campbell said on a conference call.
Campbell said the economic outlook of the country and Textron demanded “immediate and forceful action.”
Savings from the combined restructuring efforts are projected to be $120 million this year, $200 million in 2002, and at least $225 million the following year.
Textron expects a third-quarter loss of 25 cents a share before charges. The company was expected to earn 71 cents, the average forecast of analysts surveyed by Thomson Financial/First Call. Textron expects profit of 40 cents to 60 cents before charges in the fourth quarter. It was expected to earn $1.05, according to First Call.
“The company’s portfolio of businesses is showing more cracks than I would have thought possible even in the current worst case scenario,” said James Bitter, an analyst with Wilmington Trust Co., which has reduced its holdings of Textron stock in recent weeks.
Hours after the announcement, shares of Textron fell $10.50 to $32.50 in early afternoon trading after dropping as low as $32.10. The stock had declined 7.5 percent this year.
The job cuts and closing of about 50 plants will result in charges of about $400 million in the next six quarters, Textron said.
Along with eliminating its corporate chief operating officer, Textron also replaced its head of Bell helicopter. John R. Murphey replaced Terry Stinson as head of the $1.6 million Bell helicopter business.
The company is also looking for greater central control over its divisions.
Campbell announced that starting immediately the company’s six segment chief operating officers will no longer report to their segment CEOs. Instead, the chief operating officers will be reporting to corporate chief operating officer Ted French.
“Along with Ted French being more involved with the finances of the individual segments, this could help free up the CEOs at the segment level to focus on more non-financial issues with the businesses,” said Bishop.
Bishop said a similar structure exists at other large companies and conglomerates, including Coca Cola and Johnson & Johnson.
Textron could see an increase in sales if there is a protracted war against terrorism. Campbell declined to comment on whether the U.S. military has asked for production increases.
“If and when the nation gears up for stronger military actions, there are many, many Bell helicopters,” Campbell said. “That usually means an increase in spares and replacement part volumes going up.”
Textron said the recent struggles will delay, not stop, the sale of its car-trim unit to Collins & Aikman Corp. The two companies are in the midst of a $1.34 billion sale.
This story included material from wire reports.
