Transmission equipment manufacturer Twin Disc announced it will reduce operating expenses through a number of corporate cost-cutting initiatives.
The changes are the result of declines in demand for the company's products, and current economic and market uncertainty at its domestic and international operations, the company said.
Management estimates the cumulative savings of these cost-cutting initiatives to be $25 million for fiscal year 2010.
The actions include a reduction of annual base salaries of Twin Disc's salaried employees, including all executive officers; removal of the fiscal 2010 bonus/incentive plan; changes to several benefit programs; an across-the-board reduction of marketing, advertising, travel and entertainment expenses; and staff reductions and layoffs.
Through a combination of an involuntary reduction in force and a voluntary separation program, the company will reduce its work force by 16 salaried employees and 20 hourly employees at its Racine, Wis., operation. It will also be implementing rolling layoffs for its Racine work force throughout fiscal year 2010 and will be closing its Racine manufacturing facility for the month of July, the company says.
As a result, the company expects to incur costs of severance and similar personnel-related expenses aggregating approximately $1.4 million that will be accrued in the fiscal 2009 fourth quarter.
"Like many global manufacturing companies today, the breadth of the economic recession has impacted all facets of our business," chairman and CEO Michael Batten said in a statement. "While it appears that the recession is beginning to moderate, the underlying market trend has softened and has resulted in slowing sales, order rates and backlog.
"Even with the changes we're making today, the fundamentals of our business remain strong," he added.
Twin Disc designs, manufactures and sells marine and heavy duty off-highway power transmission equipment.