Johnson Outdoors Inc. announced plans to restructure and downsize the company's workforce by 50 positions in Binghamton, New York operations due to continued significant declines in military sales. The company has formally notified affected employees and will provide severance packages, outplacement assistance and other services as needed.
“Johnson Outdoors' entry into the military tent segment was a logical extension of our commercial tent business, enabling us to fully leverage our innovation and assets in big tents. 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. 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,'' said Helen Johnson-Leipold, chairman and CEO. “Equally as important is our commitment to treating people right, which is reflected in the assistance and support we are providing our valued employees during this transition.''
In 2004, the company reported peak military sales of $64 million, driven by U.S. military activity in the Middle East, and projected military revenues would return to historical levels of $20 — 25 million. Over the past three years, the company has periodically right-sized its Binghamton operations and adopted a temporary shared-work program to help maintain capacity in line with the ebb and flow of military orders.
“We do not foresee military sales increasing in the near future for two primary reasons: 1) the transition to more permanent housing for deployed U.S. troops which correlates to demand; and 2) 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,'' said David W. Johnson, VP and CFO.