Published in Manufacturing

Steelcase calls back most of workforce, partially reinstates executive pay

BY Tuesday, May 26, 2020 02:47pm

GRAND RAPIDS — Office furniture maker Steelcase Inc. has called back most of its manufacturing workforce from temporary layoffs as it gets back to work to fulfill around $700 million in customer order backlogs. 

The Grand Rapids-based Steelcase (NYSE: SCS) said today in a filing that the backlog as of May 1 was about 23 percent higher than in the previous year, which it said was a result of the company complying with various stay-at-home orders over the last two months in areas where it operates. 

Steelcase President and CEO Jim Keane COURTESY PHOTO

With the easing of most government restrictions, the company has resumed operations at all of its manufacturing and distribution facilities, although some locations remain under capacity restrictions, according to the filing. 

Executives expect the order backlog will be manufactured and shipped by the end of July. 

Along with the restart of production, the company said it was easing temporary pay cuts for salaried workers from 50 percent to 20 percent and will continue to pay the full cost of employee health insurance premiums during the reductions. 

Steelcase executive officers, whose salaries had been cut by 60 percent, will now have their pay reduced by 20 percent. President and CEO Jim Keane’s salary was restored from $1 to half of his previous base pay, according to the filing. 

“I am extremely proud of our entire organization as our people have continued to serve our customers’ needs while dealing with unprecedented circumstances,” Keane said in a statement. 

The company’s broad spending cuts, which MiBiz reported on in March, remain in place “while incoming order levels remain significantly impacted by the global pandemic.”

In the filing, Steelcase said revenues in March and April fell 39 percent on a year-over-year basis, including a 60-percent decline in April. When adjusted for currency translation and a divestiture, orders also dipped 31 percent in the two-month period. 

Both revenues and orders “reflected significant declines and volatility” in each of Steelcase’s segments, led by a 40-percent drop in revenue from its Americas division, CFO Dave Sylvester said in a statement, noting that orders grew in early March before governments started implementing the stay-at-home orders. 

“Even with the strength of our revenue growth in early March and significant pay and other cost reductions in April, our quarter-to-date profitability has been significantly impacted by the government-mandated shutdowns and related economic uncertainty,” Sylvester stated. “However, our operating cash flows have benefited from reductions in working capital as our accounts receivable collection experience during March and April was largely consistent with historical patterns.”

As of May 1, Steelcase’s total liquidity was about $774 million, up from $701 million at the end of the company’s 2020 fiscal year on Feb. 28. 

Looking forward, Keane said the company is ready to help customers “reinvent their workplaces to enable employees to be more creative, more collaborative and more productive, while supporting a range of choices that includes the option to sometimes work remotely.”

The company is expected to release its present first quarter 2021 fiscal year financial results in mid June. 

Read 3739 times
SUBSCRIBE TO MIBIZ TODAY FOR WEST MICHIGAN’S FINEST BUSINESS NEWS REPORTING >