Tuesday, August 28, 2012

Lexmark cutting 500-550 jobs in Lexington,
getting out of inkjet printer business

Lexington-based Lexmark International today announced plans to cut approximately 350 full-time positions as well as 200 contracted employees in Lexington as part of a restructuring plan that involves the elimination of 1,700 jobs worldwide.

Most of the employees whose positions have been eliminated will leave Lexmark by the end the year, said Jerry Grasso, vice president of corporate communications at Lexmark.

None of the layoffs went into effect immediately, Grasso said.

In addition to the local and worldwide layoffs, the restructuring plan includes stoping development and manufacturing of the company’s remaining inkjet printers.

The moves are expected to result in annualized savings of $95 million once fully implemented, according to an official announcement. The company will continue to provide service, support and aftermarket supplies for its inkjet installed base.

“Today’s announcement represents difficult decisions, which are necessary to drive improved profitability and significant savings,” said Paul Rooke, Lexmark chairman and chief executive officer. “Our investments are focused on higher value imaging and software solutions, and we believe the synergies between imaging and the emerging software elements of our business will continue to drive growth across the organization.

“This is a tough reminder in tough times: in today’s competitive economy, no market is forever. Even the strong struggle, and there’s nothing I can say that will make this announcement hurt any less,” said Lexington Mayor Jim Gray. “We’re glad to be Lexmark’s home and hope their business improves as the global economy improves. Our hearts go out to the people who lost their jobs and to their families. The best way to help them is to be a city where every action encourages good jobs and a strong economy. You’ve got my promise we’ll keep doing just that.”

The restructuring actions announced today are expected to result in reductions primarily in inkjet-related infrastructure as well as positions in research and development, supply chain and other support functions.

These restructuring actions are expected to result in the elimination of approximately 1,100 manufacturing positions. In addition, they include closing the Cebu, Philippines, inkjet supplies manufacturing facility by the end of 2015. The actions also include eliminating inkjet development worldwide, including costs related to facilities, tooling, equipment, contract termination, and scrapping in process inventory, which are expected to be principally complete by the end of 2015.

The company is working with its strategic advisers to explore the sale of the company’s inkjet-related technology.

These actions are expected to generate $85 million savings in 2013, increasing to ongoing annualized savings of $95 million beginning in 2015. Savings should be split approximately 65 percent to operating expense, and 35 percent to cost of goods sold. The company expects the majority of these savings to favorably impact pre-tax earnings.