The parent company of Oak Creek-based Master Lock
is aiming for $50 million to $75 million in improvements to its operating income through a series of “footprint improvements,” according to the company’s investor materials.
Master Lock is part of the security segment of Fortune Brands Innovations
, a Deerfield, Illinois-based company that includes a number of other brands like Moen, Fiberon, and Sentry Safe. Until late 2022, the company was known as Fortune Brands Home & Security. It completed the spinoff of its cabinets business, MasterBrand, in December.
On Wednesday, news broke that the company plans to close its manufacturing plant in Milwaukee, located at North 32nd
and West Center streets, in March of 2024. According to the UAW union representing workers at the plant, the move would impact 330 jobs.
In a statement to BizTimes Milwaukee media partner WISN-TV Channel 12
, a Master Lock spokesperson said the company would fully transition work at the plant to other North American and global manufacturing operations as well as external suppliers.
"This is an opportunity to continue to enhance our supply chain resilience, maximize potential growth of the business and maintain our competitiveness into the future," the spokesperson said.
Milwaukee Mayor Cavalier Johnson issued a statement Thursday morning indicating he had not heard from Fortune Brands and had “heard no logical explanation for their actions.”
“I am enormously disappointed by the impending closure of the Master Lock facility. It is a slap in the face to the hardworking Milwaukee employees. They certainly deserve greater respect and appreciation from their company,” Johnson said.
The potential for changes to Fortune Brands manufacturing footprint dates back to late 2022. At its investor day in December, the company set targets to increase its operating profit margins from around 17% to 20-22%. For the security business specifically, Fortune Brands is aiming to go from operating margins of around 15% to the range of 18-20%.
Reaching that higher level of profit requires improvements in a number of areas, including 100 to 150 basis points of improvement from footprint changes for Fortune Brands overall. Potential changes listed in the company’s investor materials included site consolidations, acquisition integrations, and outsource/near-shoring.
Those footprint actions were expected to generate $50 million to $75 million of net improvements.
Other areas for improving margins included continuous improvement on cost of goods sold and benefits of a new, more aligned business structure, netting $50 million to $100 million of improvement, and improvements to selling, general and administrative productivity, netting another $50 million to $75 million in operating profit improvement.
Within Fortune Brands, the security business is relatively small, accounting for around $600 million of the company’s $4.7 billion in net sales for 2022. In addition to Master Lock, the segment also includes Sentry Safe. It has also been slower growing, averaging around 3% per year since 2019 while the water innovations business has grown at a 6% clip and the outdoors business is up 25% per year.
Master Lock’s business is increasingly shifting toward connected devices or smart locks. At the Fortune Brands investor day in December, John Lee, the company’s chief strategy and growth officer, said digital products offered a tailwind for the company.
“Particularly in security as well, we see that value proposition expanding,” Lee said. “It’s not just about electrifying the lock and conveniently being able to open it.”
He pointed to the ability to give others access or see user history as a benefit for home owners, real estate companies or rental property owners.
Whether the shift toward connected products shaped the decision to close the Milwaukee plant is unclear. Fortune Brands did not immediately respond to a request for comment on its reasoning.
In a 2017 interview with BizTimes
, then-Master Lock president Mike Bauer noted that even as the company moved into Bluetooth padlocks, there would still be a metal shackle and a metal lock body that would be made in Milwaukee.