Sunbeam to cut 6,400 jobs in reorganization

MIAMI -- Sunbeam Chairman Al Dunlap is at it again -- taking what he considers bloated consumer product makers and refashioning them in his leaner likeness.

This time, about 6,400 jobs -- including 124 at a Pocola, Okla., plant -- will be cut as Sunbeam absorbs the Coleman, Mr. Coffee and First Alert brands bought in March.

"We see a bright future for the new Sunbeam," said Dunlap, who also on Monday released first quarter results showing losses on lower sales. "Sunbeam is financially sound. Our growth prospects are real." While company executives used the buzzwords of corporate consolidation in a meeting with Wall Street analysts, some of the employees losing their livelihoods relied on the Internet to find out their future. "We pulled up an article on the Internet, and that's what we got," said Tom Smith, manager of a Coleman furniture plant slated for closing in Pocola. The upheaval is reminiscent of wholesale changes imposed by Dunlap -- sometimes dubbed "Chainsaw" Al -- at Sunbeam in November 1996 and his previous experience at Scott Paper. The Sunbeam changes were welcomed by Wall Street at the time, but the stock dropped from $53 to $26 a share as Sunbeam's sales faltered last winter. Dunlap noted the stock is still up 125 percent since his arrival in July 1996. Looking ahead, the company's signature brands will be Sunbeam, Oster, Coleman, Mr. Coffee, First Alert and Grillmaster. Costs will be cut by closing eight factories and 30 warehouses, consolidating 10 headquarters -- including Coleman's Wichita office - - into one being built in Boca Raton, La., and shaving costs 10 percent on supply purchases. "This is not just a cost-cutting program," said Sunbeam Vice Chairman Russell Kersh. "It's a fundamental redesign that'll allow four separate companies to operate smoothly as one company." Delray Beach-based Sunbeam anticipates a one-time charge of $380 million and annual cost savings of $250 million from the consolidation expected to be complete in about a year. Sunbeam expects the combination of the corporate integration and new products to generate at least $265 million in new annual revenues. The company will be left with $2.2 billion debt after the reorganization. About 2,300 U.S. jobs and 2,800 in Mexico will be eliminated. Sunbeam plans to sell Coleman's East Pak backpack, compressor and hot tub businesses, which have 1,300 employees. The combined companies will be left with 9,500 workers by year-end. The factories to be closed include four Coleman, two Sunbeam, one First Alert and one of Mr. Coffee's Signature Brands plants, leaving 15 plants. The number of warehouses will shrink from 47 to 14 and sales offices from 35 to 15. Sales will grow on new products, such as a hot-chocolate maker, soft-sided coolers and a smoke detector with a 10-year battery, and expanding sales into Coleman's European base and Sunbeam's Latin American base. Sunbeam has set new long-term goals for annual revenue growth of 10 percent to 12 percent. The sales growth rate is a particular concern for analysts, who were leery after issuing stock recommendations based in Dunlap's overly optimistic projection of 20-plus percent sales growth earlier this year. Sunbeam said in advance that it would release poor first quarter results along with its consolidation plans. Sunbeam lost $44.6 million, or 52 cents a share on a diluted basis, down from a profit of $6.9 million, or 8 cents a share, in the same quarter last year. Sales were down 4 percent to $244.3 million from $253.5 million. Dunlap called it "a stumble that shouldn't have happened." He said he took full responsibility but blamed a marketing executive left in charge of product pricing while top executives focused on the consolidation.

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