Racine-based Twin Disc Inc. has cut executive and hourly employee pay and has eliminated 15 salaried positions as it deals with low demand from the oil and gas, pleasure craft and Asian commercial marine markets.
Twin Disc manufactures marine and heavy-duty off-highway power transmission equipment, such as marine transmissions, boat propellers and industrial clutches.
The company’s board of directors on Friday approved a 10 percent base pay cut for John Batten, president and chief executive officer, who will now make $450,000.
In addition, chief financial officer Jeffrey Knutson will have his base pay cut by 6 percent, down to $296,100; Dean Bratel, vice president of global sales and marketing, will take a 6 percent cut, to $258,500; Denise Wilcox, vice president of human resources, will have her pay cut 6 percent, to $216,200; and Michael Gee, vice president of engineering, will take a 6 percent cut, to $178,600. Two other unnamed executive officers will also take 6 percent pay cuts.
The company’s corporate incentive plan, which lays out executive bonus targets, has been suspended.
There will also be temporary layoffs in the company’s Racine operations, and all other salaried and hourly employees in Racine and domestic manufacturing facilities will take a 4 percent base salary or wage cut.
In addition, Twin Disc will work to reduce marketing, travel and professional service costs.
All in all, the actions are expected to save Twin Disc $4.3 million.
Twin Disc already restructured its North American manufacturing operations in the fiscal fourth quarter of 2015, which resulted in 79 layoffs and is expected to save $6 million per year.
“As we discussed over the past two quarters, we are adjusting our business for challenging global market conditions within the company’s oil and gas, global pleasure craft and Asian commercial marine markets,” Batten said in a statement. “We understand the actions we announced today and in the fourth quarter are difficult for our employees and communities. But given the uncertainty in many of our traditional markets, these cost reduction activities are necessary. We will continue to evaluate additional activities to align our global staffing and manufacturing capacity with current and forecasted market demand.”
“In addition, we recently announced capital reallocation initiatives, including the sale of our distribution territories in the mid-Atlantic and south east regions of the United States. These divestitures were completed in the third quarter of fiscal 2015 and the first quarter of fiscal 2016, respectively, and generated approximately $5 million in capital. The proceeds from these divestitures will be used for investments in new technologies and product line enhancements aimed at generating growth and greater profitability. We remain firmly committed to the long-term growth potential of our markets, and we are confident these cost reduction and capital reallocation initiatives will improve our competitiveness as global markets recover. With a strong customer base and outstanding global reputation for technical innovation, product quality and service, I am confident the company is well positioned for future growth.”