BY BRADEN LAMMERS, Evening News
Braden.Lammers@newsandtribune.com
American Commercial Lines is laying off nearly 10 percent of its workforce at its Jeffboat Manufacturing Division.
Approximately 120 workers will lose their jobs and a portion of salaried employees have been offered a "voluntary separation" instead of waiting to see if they are part of the cuts, said David Parker, vice president of investor relations and corporate communications.
"It's really in response to a prolonged economic downturn and an environment of fluctuating demand at Jeffboat," he said.
With the demand for new manufacturing down the cuts were somewhat expected.
"It's not a surprise to me at all," said Chaz Jones, analyst with Morgan, Keegan and Company, Inc. "Jeffboat's backlog has gone down over 50 percent in the last year."
The cuts announced Monday will occur only in the manufacturing division, but its sole purpose may not be reduction of cost.
"We don't think the headcount reductions at Jeffboat was a function of sustainability," said George Pickral, research analyst with Stephens Inc. in an e-mail. "Rather, we think the decision was about streamlining operations, which has been an ongoing process at the entire company over the past 16 months. Productivity metrics at Jeffboat have improved over the past year, so we think it is a function of needing fewer people to do the same amount of work."
The company has made other consolidation efforts recently. ACL closed its Houston office as part of a business realignment plan in February, relocating and merging some of the jobs to the company's headquarters in Jeffersonville, as previously reported in The Evening News.
The company has also been in the process of reducing the number of employees locally through a voluntary buyout program, since the Houston office closed.
"These actions are necessary in order to sustain ourselves during this economic downturn and will position us for the imminent recovery in the economy," said Jacques Vanier, vice president of manufacturing, in a press release.
"What you're seeing is the business being impacted negatively on a couple of fronts," Jones said.
Barge transportation has gone down with the reduction in overall manufacturing in the U.S. Because the need for barge transportation has been reduced, barge building has been negatively impacted, in turn negatively impacting demand, he said.
"We realize we're a large employer and obviously a workforce reduction is difficult for us," Parker said. "These actions have been taken so we can ensure and solidify our future in the local community."
Even with the efforts to solidify its future, the Jeffersonville-based transportation and manufacturing company - that has been headquartered in the area for over half-a-century - is not on stable ground. It has seen its revenue, profits and stock price plummet in the last year.
ACL's quarterly revenue growth has dropped more than 27 percent, according to statistics from Yahoo finance.
The 52-week change for ACL's stock price on the S&P 500 is down more than 25 percent.
In the past year, the high price per share for the company's stock was $51.04 in September, 2008, and the low price was $3.92 in May, 2009.
The $3.92 price was partly due to a one to four reverse split in stock, exchanging one share of stock for every four owned.
At the end of Monday the stock had closed at $13.93 per share.
According to Jones' estimates, yearly revenues will likely be around $950 million, compared to $1.2 billion in 2008. That is nearly a 21 percent loss.
The cuts will impact both salary and hourly employees and will be completed by Friday, according to the press release.
"We are hopeful that no other future workforce reductions are necessary," Parker said.
But that may not be the end of the layoffs according to analysts.
"If the economy doesn't improve we can see ACL announcing more layoffs," Pickral said. "The backlog at Jeffboat doesn't extend very far into 2010, so we would not be surprised to see more layoffs in that division in the future unless the demand for new barges picks up over the next 6 to 9 months, which seems unlikely given the excess barge capacity in the marketplace."