Sunbeam To Slash Jobs, Products Sweeping Reorganization Eliminates 6,000 Jobs

Home appliance-maker Sunbeam Corp. will eliminate half of its 12,000 jobs and drop lesser-known products like patio furniture to stick with kitchen appliances.

The drastic revamping announced Tuesday is the turnaround plan of Albert Dunlap, who was hired by Sunbeam months after slashing costs and 11,200 jobs at Scott Paper Co. to put it up for sale.

Sunbeam’s existing operation “was a plan for total disaster,” said Dunlap, who became known as “Chainsaw Al” for his harsh medicine at stagnant companies. “The company as it was going would have been out of business in 18 months.”

Dunlap’s arrival at Sunbeam last summer bolstered confidence on Wall Street that the company would either become an attractive takeover target or a more efficient survivor, building expectations for a slicing and dicing of a company known for its Sunbeam, Oster and Mixmaster brands.

Sunbeam stock more than doubled from $12.25 a share in July to Monday’s close of $25.87. Following the announcement, Sunbeam fell 50 cents to close at $25.37 on the New York Stock Exchange.

The cuts were harsher than analysts had expected.

“It is one of the most severe cuts, especially when it’s not driven just because of economic conditions,” said John Challenger of the Chicagobased job-placement firm Challenger Gray & Christmas. “What’s so remarkable is it’s very severe, quick. A lot of times these things are spread over time.”

The company’s appliances, gas grills and outdoor furniture dot America’s kitchens and patios, but Dunlap has said its 5,000-item product line was too diverse and its management and distribution bloated.

The cutbacks cover all levels of the company, including 3,300 jobs at 12 facilities with product lines to be to shut down or sold, 2,100 jobs at six facilities to be closed outright to reduce production, 700 administrative jobs and 185 headquarters jobs.

Dunlap is shrinking Sunbeam from 26 to eight factories and dropping 87 percent of its products. The company will keep factories in Hattiesburg and Waynesboro, Miss., Neosho, Mo., and McMinnville, Tenn. Three in Mexico and one in Venezuela also will stay open. The number of warehouses will fall from 61 to 24.

Sunbeam will drop production of furniture, clocks, thermometers, Counselor and Borg scales and decorative bedding and seek buyers for those lines of business. Furniture alone accounted for 4,500 products.

Mark Cannon, 43, of St. Charles, Ill., a sales representative for Sunbeam’s Samsonite outdoor furniture, noted the brand has changed hands several times in his 18 years with the line.

“There’s always some apprehension when you go through a sale, but I’ve gone through five or six with Samsonite,” he said. “That’s the way business is these days.”

The remaining businesses will make kitchen appliances, personal care, health care, barbecue and professional care products.

“This thing has been planned like the invasion of Normandy,” Dunlap said. “We’ve had 17 teams working for the last 3-1/2 months setting up these goals and objectives. It wasn’t a slow morning today and I wrote this on an envelope.”

His goal after a speedy reorganization is to double revenues to $2 billion and boost operating profits from 2.5 percent to 20 percent in three years, in part through new products, such as 220-volt appliances, a big international push, outlet stores, catalogs, Internet sales and infomercials.

“We will be a leader in new product development,” Dunlap said, promising 30 new products a year. Coming soon will be a new toaster, automatic shutoff iron and electric blanket equipped with internal logic technology.