Andersen Windows To Cut 250 Positions

Date: 21 July 2009
Source: Star Tribune
In another sign that the housing market has yet to hit bottom, window manufacturer Andersen Corp. said Tuesday it will permanently eliminate 250 management and staff positions, more than half of them at its Bayport, Minn., headquarters.

In addition to the job cuts announced Tuesday, Andersen eliminated 287 jobs last week as part of the closing of a vinyl window manufacturing plant in Fall River, Mass., said Maureen McDonough, a spokeswoman. Tuesday's workforce reduction represents about 10 percent of the company's management and office staff.Those cuts come at a time when 600 production workers who were laid off earlier this year have been recalled as orders have improved slightly.
 
The management and staff cuts are being made because the company believes its markets won't recover until late 2010 or early 2011, making it necessary to eliminate jobs that aren't directly related to the current volume of window production, McDonough said.
 
"While we had every hope and intention of riding out this market correction without making adjustments like this, it has become clear that these actions are necessary to protect the company's financial strength and flexibility given the fading prospects for a near-term housing market recovery," Jay Lund, president of the Andersen Window and Door Group, said in a statement.
 
Thomas Stinson, the state economist, said Andersen's timeline for a housing market recovery "is consistent with other forecasts I've seen" and that the company's decision to cut overhead expenses makes sense.
 
The company is right to be cautious because it could take the nation a long time to get back to a normal level of housing starts, he said. U.S. housing starts in 2008 were at the lowest level since World War II, and this year there will be only half as many new houses as there were last year, he said.
 
Others say the company might be too cautious in predicting the start of a housing market recovery in late 2010 to early 2011.
 
"We think the housing market will probably hit bottom in sales and new housing starts before that," said Scott Anderson, vice president and senior economist at Wells Fargo & Co. in Minneapolis, although unemployment and slowed growth in personal income will continue to impede the housing recovery. But even when the national economy recovers, it probably won't mean a return to prior sales levels for consumer products such as windows, he said.
 
"We're in for a prolonged period of slower growth in consumer spending that could last many years after the end of the recession," Anderson said. "There's been a shift in consumer behavior due to the high debt levels people acquired in the last seven years of the housing boom. The savings rate will remain high, and there won't be the same level of consumer spending."
 
The permanent reduction in force in Bayport and 37 other locations nationwide will be made through job eliminations, early retirements, eliminating unfilled positions and attrition. Privately owned Andersen employs just under 11,000 people nationally, 3,500 of them in Minnesota.
 
The restructuring involves combining work in areas such as accounting, ordering and payroll processing, McDonough said.
 
Rising unemployment, escalating home foreclosures, falling home prices, tighter consumer credit and diminished consumer confidence all have hurt sales of Andersen products, she said.
 
The production workers were recalled to handle current demand that is based on seasonality, price promotions and a federal tax break for consumers who install more-energy-efficient windows and doors -- a tax break that is part of the federal stimulus package, she said.
 
The effect of the stimulus spending "is taking a little bit longer than expected," she said. "A lot of homeowners don't know what it means for them or how to get it."
 
In a separate action, Andersen Corp. confirmed that it will close its Andersen Logistics operation in Brooklyn Park later this year. The facility distributes Andersen products to dealers, and has 15 employees, down from about 50 a year ago.

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