Kennametal to cut global workforce 10% by end of year

Facing a weakness in its industrial markets caused by the covid-19 pandemic, Kennametal Inc. said Tuesday it is accelerating its plans to permanently cut about 10% of its salaried workforce, a reduction on a global scale it expects to substantially complete by the end of the year.

Kennametal, an industrial tooling company with headquarters in Pittsburgh and a corporate campus in Unity, did not elaborate Tuesday on how many employees will be cut in Western Pennsylvania or throughout the company.

Kennametal did not respond to a request for a comment.

Salaried employees will take temporary pay cuts of 10% to 20% beginning July 1, based on job level through the remainder of the calendar year. By cutting salaries, the company said it expects to save approximately $10 million to $15 million per quarter, which is similar to and replaces furloughs or similar actions in place for salaried employees.

Any pending layoff of Kennametal’s salaried workforce in Pennsylvania has not been posted on the state Department of Labor and Industry’s Worker Adjustment and Retraining Notification Act website. The WARN Act requires advance notice of mass layoffs or plant closings.

Kennametal revealed the accelerated restructuring after sales in its January through March 31 quarter dropped by $114 million, from $597 million a year ago to $483 million this year. It posted a net income of $2.24 million for the quarter, compared to $78.4 million in the same period year ago.

Based on the company’s April and May sales, “we expect economic weakness will persist,” Rossi said. The cost reductions will be maintained until Kennametal begins to see markets recover, Rossi added.

The company said it hopes to realize annual savings of between $65 million to $75 million by the accelerated restructuring, but the pre-tax charges could cost from $90 million to $100 million resulting from severance payouts. Kennametal initially expected to save between $25 million to $30 million by June 30, 2021, the end of its fiscal year 2021.

The news did not do anything to improve the price of Kennametal’s stock, which closed at $31.08 a share, down 11 cents on Tuesday.

Kennametal said it will continue temporary shutdowns and reduced production schedules to align manufacturing capacity to anticipated customer demand.

The company closed its Carbidie plant along Arona Road last year and moved production to a more modern plant in Rogersville, Ark.