NO LOVE AT SPARTECH

Global supply and demand, raw material costs, cost of capital, and logistics all have their impacts. The time for long-term employees has since past as changing financial and operating dynamics by shedding operations and personnel are the norm.

Spartech facility will close, eliminate 70 jobs (October, 2017)

The plastic thermoforming company Spartech, founded originally as Creative Forming at 100 Creative Way, will be shutting down. “Spartech LLC., has notified that Department [of Workforce Development] that due to a change in business circumstances they will be permanently closing their facility located at 100 Creative Way, Ripon, WI,” stated a press release sent out at 4:47 p.m. “A total of 70 employees are expected to be affected in phases beginning Dec. 4, 2017 through March 30, 2018.” <Source>

Arsenal Capital Partners Acquires the Designed Structures and Solutions Segment of PolyOne Corporation (July, 2017)

Arsenal Capital Partners, a leading New York-based private equity firm that invests in middle-market specialty industrial and healthcare companies, announced today the acquisition of PolyOne Corporation’s Designed Structures and Solutions segment which will be renamed to Spartech LLC. Headquartered in Maryland Heights, MO, Spartech provides packaging, visual and structural sheet and rollstock materials and specialty products for the food, medical, building and construction, aerospace, automotive and other markets. Spartech was acquired by PolyOne in 2013, and included the extrusion and packaging segment as well as a compounding and masterbatch segment (which was integrated into other PolyOne segments and remains a part of PolyOne). The newly formed Spartech has a network of 15 manufacturing facilities strategically located throughout the U.S. and includes established brands like Polycast, Royalite and SoundX. <Source> 

PolyOne Corp. closing 6 plants and reducing staff by 250 (July, 2013)

The plant closings, expected to be completed by the end of 2014, are part of a company realignment affecting PolyOne's North American manufacturing segment, according to a news release. Production at these facilities will be shifted to other plants. The company has more than 80 manufacturing and distribution facilities worldwide, including South America, Europe, Asia and Africa.

The plant closings are a result of PolyOne's acquisition of Spartech earlier this year. "These actions are entirely consistent with our previously announced plans to integrate PolyOne and Spartech, and to accelerate our specialty transformation," StephenNewlin, chairman, president and CEO, said in the release. "By combining our resources, we expect to better serve our customers with a more competitive cost structure, improved product quality and on-time delivery with increasingly innovative technologies."

The realignment is expected to generate annualized pre-tax savings of about $25 million in 2015, the release said. It is expected to cost the company about $45 million over the next 12 to 18 months, primarily for severance, asset relocation and additional capital investment. <Source>

Spartech will layoff 350 workers to regain profitability (August 18, 2003)

Sales for the third quarter of 2003 held steady for Spartech Corp., but earnings fell by more than 25% compared with last year, so the producer of sheet and specialty compounds has announced measures to increase its operating margins. As part of Spartech’s "Lean Process Initiative", the company’s workforce will be cut by about 10%, which equals 350 workers. Also, work schedules at several operations will be realigned and certain warehouse facilities will be consolidated or eliminated. <Source>

NO LOVE AT HARMAN PROFESSIONAL SOLUTIONS

Harman Professional Solutions, the iconic manufacturer of professional audio, video, lighting and control systems, is now restructuring and consolidating after its purchase by Samsung in 2016. This will result in office closures and the layoff of approximately 650 employees.

Of course, David Glaubke, Harman’s Director of Public Relations, has put forth the happy management-speak spin.

• “Still, I want to emphasize that decisions like this, while necessary, are not easy to make. We have given our employees advance notification of the changes we will make over the next year to assist with the transition and will do our best to mitigate the impact to our employees and their families.” 
• “The changes we announced yesterday are the culmination of a transformation that the Professional Solutions division has been undergoing for the last two years to better serve our customers, increase our competitiveness and accelerate new product innovations.”
• “We are now consolidating certain locations acquired through acquisitions over the years to leverage the R&D, engineering, design and manufacturing operations of our other divisions and speed up our time to market.” 
• “We also are investing in a stronger IT infrastructure, supply chain and software-driven NPIs [new product introductions] that will improve high-demand product availability and processes and resources for our customers, sales teams and distributors.”
• “Importantly, we also will ensure that the process is completely seamless for our customers. We are very excited about the future of Harman Professional Solutions and believe that, with these changes, we are now aligned and structured to serve our customers better and to return to stronger profitable growth.”

The original company was co-founded by two engineers, Sidney Harman and Bernie Kardon where Bernie was coincidently Sidney’s boss at his first job at the David Bogen Company. Another reason you may wish to treat your boss and co-workers with the utmost respect. Throughout his life, Harman was known for fostering a familial company culture. A lifelong supporter of charitable causes, Sidney was active in the management of the company’s affairs until he retired in 2006 at the age of 88. He passed away in 2011 at the age of 92.

NO LOVE AT CSX RAILROAD

Driven by hedge-fund activism, former Canadian Pacific CEO Hunter Harrison has now moved to major rail transportation provider CSX and is prepared to undertake a modernization and turnaround plan based on the “precision scheduled railroading” model which optimizes equipment, personnel, loads, and routing. Of course, the only fly in the ointment is unanticipated events such as equipment failures, derailments, or significant changes in both scheduled and unscheduled demand.

SLIDE 12 - CSX WORKFORCE REDUCTIONS

As the recent Cowen and Company investor’s conference, CSX Chief Financial Officer Frank Lonegro presented optimistic news about CSX’s recovery and growth prospects. Unfortunately, as noted by slide 12 in the presentation deck, the improvements came with a very heavy cost in employee layoffs. Lonegro explained, “The industry has made great progress, but we did not make meaningful progress when others did.”  Last year (2016) CSX’s operating ratio was 69.4% with a target of mid-60’s in 2017.

As per a previous post, NO LOVE AT UNION PACIFIC RAILROAD, UP was “prepared to spend approximately $90 million, including $15 million for severance pay plus pension benefits and other expenses, to reduce their operating ratio from last quarter’s 61.8 percent to a more desirable 55.5%.”

This shows how far CSX may have to go to play catch-up. Look for continuing reductions in force.