During a Q&A session at the end of its May 8 earnings call, Rockwell Automation’s chairman and CEO, Blake Moret, acknowledged that its cost cuts for the second-half of fiscal-year (FY) 2024 will include an approximate 3% staff reduction. Because the company employs about 29,000 people, this translates to about 870 layoffs.
“Most of the reduction in force we’re looking at affects selling, general and administrative (SG&A), and that does include sales, marketing and headquarter functions,” said Moret. “I think as we look at guiding principles, we’re directing the spend to the highest-value activities geographically and from a product portfolio standpoint.”
Despite good result in many of its usual businesses, Moret explained that Rockwell needs to reduce personnel to help offset persistently high inventories of its products—and subsequently lacking order—among machine-builder clients and other customers in the discrete and hybrid sectors it serves, such as automative, e-commerce, food and beverage, and warehouse automation.
“At a high level, our performance in Q2 was good, but I’m not happy with the reduced guidance for the full year. The impact of high inventory levels among machine builders is larger than we expected,” said Moret during the call. “Orders are still expected to return to year-over-year growth in Q3 and continue to increase during the year, but the slower ramp is impacting shipments for the second half. Consequently, we’re accelerating actions to bring costs in line with the revised outlook on current year orders, aligned with the more comprehensive program to expand margins.”
Nick Gangestad, Rockwell’s retiring CFO, added that Rockwell is expecting about $60 million in restructuring charges related to the headcount reductions in FY24’s second half.
“We’ll save the $100 million in the second half of this year from accelerated actions taken now, creating a beneficial starting point for fiscal year 2025,” added Moret. “We’ll see incremental savings of $120 million next year from these actions, plus added savings from the more comprehensive program targeting sourcing, manufacturing and SG&A.”
