NORTH CANTON, Ohio -- Diebold Inc. today announced a multi-year global realignment plan that entails the elimination of 700 jobs.
The cuts will reduce the company’s cost structure by $100 million to $150 million, the company said.
"The process of change management is challenging, and it entails making difficult decision. These difficult but necessary actions represent significant changes to our overall cost structure and organization,” George S. Mayes Jr., Diebold executive vice president and chief operating officer, said in a news release. “We have performed a thorough review of our current and future business requirements and have identified the changes that will support our long-term strategies to maximize cash flow, enable continued growth and drive shareholder value."
The news comes as Diebold, a supplier of self-service delivery and security systems and services, released its 2013 first quarter earnings, which revealed a $13.4 million loss, or 21 cents per share, for the quarter. Diebold attributed the losses to “the dramatic shift in North America from higher-margin regional accounts to lower-margin national accounts.”
Diebold projects the realignment plan, which it initiated late in the fourth quarter, will be completed by the end of 2014, with total savings realized by the end of 2015. It already implemented $60 million of the overall savings plan, beginning in the late fourth quarter.
The plan involves:
- The reduction of approximately 700 full-time job positions, primarily in North America and corporate operations, most of which already have taken place.
- Rationalization of manufacturing facilities, which involved the sale of operations in Lynchburg, Va. and Lexington, NC to Porter’s Group LLC, a long-time materials supplier based in North Carolina. The deal was announced in March 2013.
- Implementation of stricter policies to control discretionary spend, including a restriction on non-essential travel, a reduction of the number of company vehicles, the cancelation of non-critical consulting engagements, and reducing budgets for non-core marketing activities and other initiatives.
Mike Jacobsen, a spokesman for Diebold, said he couldn’t give an exact number of job cuts that have already occurred, but did say the cuts began in January.
The company also plans to centralize its management structure by:
- Globalizing its service organization and processes to increase efficiencies, improve customer response times and reduce the cost to provide service.
- Creating a unified global organization for research and development to eliminate duplication of effort, leverage regional solutions globally, increase speed to market and drive down product costs.
- Transforming the company’s general and administrative cost structure by increasing use of existing shared services in low-cost regions, common processes and best practices.
- Focusing on commercial effectiveness by reevaluating pricing strategies, reducing fixed costs in the sales organization, improving time to market and management of product-life cycle.