During its annual investor presentation in New York City, Emerson CEO David Farr announced a restructuring plan that will eliminate about 2,900 salaried jobs, but Emerson will not split itself into two companies.
Farr detailed the Emerson restructuring plan that included as many as 145 facilities would close worldwide, including sales offices, service centers, and factories. The plan would save the company about $450 million a year by 2023. Farr described the decision as necessary based on the slowing global demand for Emerson’s products like automation systems.
Emerson has about 88,000 employees around the world, with 39,000 salaried positions including engineers and sales staff. Farr said in addition to the 2,900 eliminated jobs, another 1,000 salaried employees may be asked to relocate.
Farr also talked about the potential of splitting the company in two, something hedge fund investors D.E. Shaw recommended last October. The investors used strong language in its recommendation, saying “Emerson has been a perennial underperformer”, and that the company is failing investors with poor capital allocations. Farr said Emerson will not be splitting, and after making some governance changes last November, D.E. Shaw is satisfied with Emerson’s decisions.