Rockwell Automation Inc. will cut hundreds of jobs as its leaders react to the fact that many of their machine-builder customers are still working down inventories.
Chairman and CEO Blake Moret recently told analysts that Rockwell will trim its payroll by about 3% as part of a plan that will save the company $100 million in the second half of its fiscal year (which ends Sept. 30) and set it up to save another $120 million in its fiscal 2025.
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The 3% figure amounts to nearly 900 people; Milwaukee-based Rockwell last fall employed about 29,000 people globally, with roughly 10,000 of them in North America. Moret said the cuts will most affect sales, marketing, and headquarters employees but also will include layoffs in other geographical locations and in various parts of Rockwell’s product portfolio.
“As we look at guiding principles, we’re directing the spend to the highest-value activities,” Moret said.
Moret and other executives with Rockwell say the cuts aren’t a direct response to the slower-than-expected order growth but are instead an acceleration of broader cost-cutting plans with that $100 million second-half target. Included in that work are the continued integration of some recently acquired businesses, some technology efficiencies and changes in materials purchasing programs.
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Moret and CFO Nick Gangestad first flagged the issue of sticky inventories with some customer groups in January. Orders, they noted, had begun to rebound nicely from their 2023 lows but the Rockwell team hasn’t had a clear view of just how much inventories had been built up during and after the Covid-19 pandemic.
During a March update, Moret said the inventory situation appears to be due more to timing than to underlying demand but added that it was likely Rockwell’s quarterly results would come in at the low end of his team’s guidance. Last week, however, he and Gangstad did substantially lower their outlook for the company’s fiscal 2024.
“Orders are still expected to return to year-over-year growth in Q3 and continue to increase during the year,” Moret said on a conference call. “But the slower ramp is impacting shipments for the second half.”
Shares of Rockwell (Ticker: ROK) were changing hands around $274 on the afternoon of May 15, which was up more than 1% on the day. They also are up slightly over the past six months, growing the company’s market capitalization to about $31.3 billion.
