Parker Hannifin to Cut 850 to 1000 Jobs

Newsday ^ | June 20, 2002 | The Associated Press

[Willie Green]

MAYFIELD HEIGHTS, Ohio -- Parker Hannifin Corp. will cut 850 to 1,000 jobs, largely due to slow sales of semiconductors, and take various charges against some of its assets, a company spokeswoman said Thursday.

The suburban Cleveland-based manufacturer of technical parts made about 60 acquisitions in the past 10 years. It will take a charge of $37 million related to the decline in value of those acquisitions as required by new accounting rules.

The company announced the financial issues Wednesday, and in a conference call a company official mentioned related job cuts could be near 1,000.

[Willie Green]

Parker Hannifin is not a "household name" since they primarily manufacture components used by other manufacturers. However, their high quality products are long established and see widespread use. In many ways, the outlook for Parker reflects that of the manufacturing sector of our economy in general.

[ninenot]

Note, however, that the cuts are NOT in P-H's major industrial areas: hydraulics, bearings, seals, hoses, etc.

Seems, therefore, that their OEM biz to mobile equipment and auto mfgrs is holding up.

[corkoman]

PH make great peristaltic pumps used in biomedical applications

[Willie Green]

Seems, therefore, that their OEM biz to mobile equipment and auto mfgrs is holding up.

As far as this particular anouncement, that's true.
But note the last sentence in the article that states 5000 to 6000 have been laid off during the last two years.

[ninenot]

That 5 to 6 thousand is most likely result of all the acquisitions--closing duplicate-product plants, getting rid of the acquired company's duplications of personnel, etc.

NOt good--but not horrific.

[razorback-bert]

Seems to me, this is the major problem:

made about 60 acquisitions in the past 10 years. It will take a charge of $37 million related to the decline in value of those acquisitions

Were the acquisitions Roll Ups using IPO money?

[rohry]

"Were the acquisitions Roll Ups using IPO money?"

Seems like they used stock to buy these companies according to some quick research here:

http://biz.yahoo.com/n/p/ph.ht ml

Looks like a case of falling sales:

"The charge, to be taken in the fiscal fourth quarter ending June 30, will equal 42 cents a share.

Cleveland-based Parker Hannifin said about three-quarters of the charge, or about $37 million, will be for assets that have diminished in value in businesses serving the depressed semiconductor market and for noncore units.

Parker Hannifin has already closed 30 plants and cut about 6,000 jobs, or roughly 15 percent of its work force, since the economy slipped into recession last year. It currently has about 45,000 employees in 45 countries worldwide.

The write-down, taken as a result of new accounting standards, represents 1.6 percent of company acquisitions in the past 10 years.

The new standards allow companies to stop writing off goodwill -- the difference between the price paid to acquire a company and the fair value of its assets -- on a quarterly basis. But the rules also require companies to take a charge if the goodwill has dropped in value."