Stanley Black & Decker, the world's largest toolmaker, is closing up shop at two of its U.S. plants in a move expected to leave hundreds of employees without jobs as it transforms its manufacturing and distribution network.
The closings of its facility in Fort Mill, South Carolina, and manufacturing plant in Mission, Texas, is the latest move by the New Britain, Connecticut-based company in its ongoing global cost reduction program expected to save it billions of dollars by the end of 2025. Stanley Black & Decker already has saved $1 billion since it began streamlining its business and reshaping its operations more than a year ago, Chief Financial Officer Patrick Hallinan told investors during the company's fourth-quarter earnings call last month.
"We are on track to deliver our $2 billion pre-tax run-rate cost savings target by the end of 2025," Hallinan said. "We achieved [about] $160 million pre-tax run-rate cost savings in the fourth quarter, bringing our aggregate savings to over $1 billion since program inception. This performance is slightly ahead of plan as our teams accelerated savings efforts to offset macroeconomic volume headwinds that were greater than expected throughout the year, including during the fourth quarter."
Like other consumer- and professional-facing companies, Stanley Black & Decker's bottom line has been hit by inflation, excess inventory built up during the pandemic and rising interest rates. The outdoor power equipment industry also continues to show signs of customers reducing their inventory, executives told investors, with no expectations that this segment will pivot to growth this year.
Stanley Black & Decker launched its global cost reduction program in mid-2022 that included plans to transform its manufacturing and distribution network from a "decentralized and inefficient system of sites built through years" to a strategically focused supply chain, according to the company's annual report filed with the Securities and Exchange Commission in February. The plan includes site closures, transforming some existing sites into manufacturing centers of excellence and reworking its distribution network.
Stanley Black & Decker recorded net restructuring charges of $39 million in 2023, primarily related to severance and facility closures associated with the supply chain transformation. The company expects to achieve annual net cost savings of $45 million by the end of this year related to the restructuring costs incurred during 2023, according to the report.
Changing Footprint
When it comes to Stanley Black & Decker's footprint transformation, they start with "an overarching strategy of finding ways to get closer to our customer," President and CEO Don Allan said on the call. The company plans to keep developing "centers of excellence" for manufacturing tools throughout the world, Allan said.
The company had 50,500 employees in 59 countries at the end of 2023, with 36% of those workers in the United States, according to the annual report.
Stanley Black & Decker sent a Worker Adjustment and Retraining Notification letter to the Texas Workforce Commission last week that said it decided to transfer two "value streams" to other locations within the company after an enterprisewide assessment of its manufacturing and logistics network.
As a result, the company plans to permanently lay off about 127 workers at a roughly 270,000-square-foot industrial facility at 802 Trinity St. in Mission, Texas, near McAllen and the U.S.-Mexico border. About 96 employees are expected to be laid off between May 10 and May 27, with another 31 employees laid off by Aug. 2, according to the letter.
Last week, Stanley Black & Decker filed a similar letter with the South Carolina Department of Employment and Workforce notifying the state it planned to permanently lay off 192 workers and close its Fort Mill manufacturing plant before the end of the year. The South Carolina layoffs are also expected to begin May 10.
Stanley Black & Decker did not immediately respond to an interview request from CoStar News seeking additional information about its U.S. plant closures.
Previous Closings
Stanley Black & Decker closed other factories in Texas and South Carolina last year, resulting in a loss of around 360 jobs. Those plants were in Cheraw, South Carolina, and Fort Worth, Texas.
The toolmaker's most recent planned closures in Texas and South Carolina come seven years after each facility was unveiled to the public. Stanley Black & Decker announced plans in 2017 to invest $31 million into a 345,000-square-foot manufacturing plant that would make and assemble DeWalt cordless power tools in Fort Mill and employ 500 workers.
That same year, the company announced it would open a nearly 300,000-square-foot manufacturing plant in South Texas that was expected to employ about 450 workers and make DeWalt power tool products.
This year is the 100th anniversary of the DeWalt brand, executives told investors on the earnings call, a milestone year and a reminder that "we have been revolutionizing job sites for a century."