Johnson Controls cut 1,600 jobs worldwide last quarter, with more to come

Another 4,900 positions to be eliminated by 2020

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Johnson Controls International plc cut 1,600 employees from its workforce in April, May and June of this year and plans to cut nearly 5,000 more by 2020, according to securities filings.

The cuts are part of restructuring plans introduced in the 2016, 2017 and 2018 fiscal years with a total of 9,200 employees to be terminated, a more than 7 percent reduction in the global building technology and automotive battery supplier’s workforce. Johnson Controls employed 121,000 people worldwide at the end of its 2017 fiscal year in September.

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At the same time, Johnson Controls chairman and chief executive officer George Oliver has emphasized adding and reorganizing the company’s sales staff this year. The company added a net of 775 new sales employees in the first three quarters of the fiscal year and plans to end with a net increase of 900.

The job cuts appear to have picked up pace since Oliver took over for Alex Molinaroli as chairman and chief executive officer in September of last year. The company has cut 2,700 jobs across the organization since the leadership transition. In the first 12 months following the merger with Tyco, when Molinaroli was still in charge, the company cut 1,600 positions.

“Under George Oliver’s leadership we are focused on accelerating growth, expanding gross margins and improving cash flow while investing in new products, technology and our sales team,” Fraser Engerman, a Johnson Controls spokesman, said in an email when asked if the cuts had accelerated under Oliver.

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Johnson Controls has made progress on all three of those focus areas. Net sales increased 6 percent in the third quarter and are up nearly $1 billion or 4.5 percent for the year. While gross profit margins are down for the year, Oliver told analysts last week the company’s backlog is seeing higher margins following a change in incentive structure.

The company also reduced its corporate expenses by 28 percent in the first nine months of its fiscal year and selling, general and administrative expenses were down nearly 8 percent.

The securities filings do not specify which regions the job cuts are coming from and Engerman declined to say how many cuts Johnson Controls made in the Milwaukee area or how many of the new sales people will be based here.

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Most of the post-merger cuts – 7,300 jobs – are or will be concentrated in JCI’s building technologies and solutions business. Another 1,700 jobs are coming from corporate operations and 200 come from the power solutions business.

In the three plans, the company set aside $621 million for employee severance and termination costs, excluding the spinoff of automotive seating supplier Adient. Through the end of June, JCI has used $364 million of those reserves, nearly 60 percent of the total.

Once fully implemented, the restructuring plans should reduce JCI’s annual operating costs by $565 million. According to securities filings, the company anticipates realizing nearly $407 million in savings this year.

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