Emerson Electric to cut 4,000 jobs, close 20 plants

ST. LOUIS -- Emerson Electric Co. is cutting 4,000 jobs, or 10 percent of its salaried work force, and will close about 20 of its 350 plants worldwide because of a decrease in customer demand and a downturn in the economy aggravated by last month's terrorist attacks.

About 70 percent of the cuts announced Monday have already occurred, said Emerson spokesman Mark Polzin. No timetable was specified on when the rest of the cuts would be made.

Polzin would not say where the layoffs are coming or which plants will close. He said more details could be available after Nov. 6, when quarterly and fiscal-year earnings are announced. Polzin said the company will focus the restructuring in the areas of electronics and telecommunications.

Emerson, based in St. Louis, also warned that its operating earnings would be lower than Wall Street expects for this fiscal year.

In trading Monday on the New York Stock Exchange, Emerson shares rose $1.38 to close at $50.27.

Challenging year

This year "has proven to be a challenging year for our businesses," chief executive David N. Farr said. "Economic difficulties that were initially confined largely to U.S. industrial goods and telecom equipment spending have expanded into a broad-based global downturn, and the effects of the Sept. 11 tragedies are adding further impact."

Emerson expects to report operating earnings of $3.01 a share for fiscal 2001, compared to $3.30 a year ago. That excludes a charge of $375 million in the fourth quarter to accelerate cost reductions and better position the firm.

Analysts surveyed by Thomson Financial/First Call anticipated earnings of $3.08 a share for the year before charges.

In July, the company announced it expected lower full-year earnings for the first time in 43 years and at that time had cut more than 6 percent of its salaried work force of 40,000.

It cited an "unprecedented" decline in its electronics and telecom business.

Emerson had sales of $15.5 billion in last fiscal year.

As for the layoffs announced Monday, "It appears to be an accelerated restructuring effort," said Kieran Hurson, a senior research analyst with Midwest Research. "It seems like they might have some overcapacity there they need to work down."