The American company hopes to save $22-26 million annually after taxes with a restructuring plan that will cut 2,300 positions globally and shift more of its domestic production to other countries. The move will involve extraordinary expenses of $45-52 million after taxes, half of which will be charged to the 2006 accounts. Russell Corp. expects to see 20 percent of the savings in 2006, 80 percent in 2007, and 100 percent in 2008. The layoffs will be compensated by the creation of 1,200 new jobs in Honduras and Mexico.
The goal of the reorganization is to increase competitiveness and improve efficiency- generating higher margins and improving profits. All textile production at Russell’s facility in Alabama will be terminated, and some of its manufacturing plants in Mexico will be closed. The company’s Huffy basketball backboards, which were formerly made in Wisconsin, will now all be manufactured in China. The downsizing also cuts 90 positions in corporate and divisional offices.
At the same time the group will look to improve sales and marketing for its Russell Athletic brand, which is introducing its Dri-Power moisture management technology into its line of fleeces for Fall 2006. Spalding will be introducing its Never Flat basketball just in time to heavily promote it during next month’s NBA All-Star Game.
