DeLoach said the downturn in the economy started for Sonoco in the second half of 2007 and the company doesn’t expect to see significant improvement in the global economy until the end of 2009.
Cost-cutting measures aimed at positioning the company to better respond to market conditions included closing about 15 manufacturing plants, reducing hours for some employees and eliminating more than 700 positions globally, he said.
“Also, in 2009, we are deferring all wage increases for salaried and hourly employees and temporarily suspending the company’s matching contributions for those employees participating in the company’s 401(K) plan,” DeLoach said. “These actions, while very difficult, are necessary so that we can remain competitive in a dramatically changing marketplace.
Sounds like a familiar story right now, doesn’t it? Company in trouble turns to employees for operational savings. There’s just one little problem.
Sonoco produced record sales and its second-best base earnings performance ever in 2008, despite the global economic crisis, the company’s chairman, president and chief executive officer told shareholders at their annual meeting Wednesday.
Because of economic conditions, the board decided to keep the quarterly dividend payout at the same level that it was in 2008, DeLoach said, but the board remains committed to its long-term policy of increasing dividends when business conditions allow.
For the year 2008, cash generated from operations totaled $379 million, and while that was down 15 percent from the previous year largely because of changes in working capital, cash flow in 2008 ranked as the third highest in company history, DeLoach said.
By year’s end, Sonoco’s total debt had declined to $690 million versus $850 million at the end of 2007, he said.
Since 2000, the company has returned more than $1 billion in cash to shareholders in the form of dividends and share repurchases, he said.
“Few companies can match the 84 consecutive years that Sonoco has paid dividends to its shareholders,” he said.
Yes, that’s from the same article. I’ve mentioned elsewhere that the key to keeping your employees from organizing is treating them fairly. How fair do you think Sonoco’s employees will find it that their pay and benefits are cut in a time of prosperity, while the shareholders, who contribute nothing to the success of the company, not only saw no decrease in their dividend but were considered for an increase?
The next time someone tells you that values are to blame for our screwed up economy, feel free to agree with them. Just make sure you point out it’s the corporate values that are at fault.