Johnson Outdoors Inc. cut 50 positions, or nearly a third of its workforce, at its tent manufacturing plant near Binghamton, NY due to declining military sales.
“While we expected military sales would steadily return to historical levels from their peak in 2004, there has been a steeper than anticipated decline in orders this year,” said Helen Johnson-Leipold, chairman and CEO. “Without any indication of a change in this situation, we must act promptly to help minimize the impact of today's reality on the company's future.”
In 2004, JOUT reported peak military sales of $64 million and projected military revenues would return to historical levels in the $20 million to $25 million range as the needs of the U.S. military in the Middle East tapered off. Over the past three years, JOUT has occasionally shifted to three-day weeks and taken other steps to maintain capacity as military orders ebbed and flowed. Falling military and commercial tent sales contributed to a 27.6% decline in sales at JOUTs Outdoor Equipment business in the six months ended March 28.
“We do not foresee military sales increasing in the near future for two primary reasons,” said David W. Johnson, VP and CFO. “One, the transition to more permanent housing for deployed U.S. troops which correlates to demand; and two, the impasse on this year's Supplemental Defense Spending bill which correlates to the military's ability to buy new tents. Therefore, while we are working hard to secure future orders, current projections are that military revenues for fiscal 2008 will fall in the $17-20 million range.''
The company will provide severance packages, outplacement assistance and other services as needed. The jobs will be eliminated June 20.
