Faced with a significantly smaller market that shows no signs of immediate recovery, Pulte announced Tuesday (May 29) plans to further shrink its operations to match, cutting its workforce by another 16% on top of the 25% labor force reduction it made last year and in early 2007.
"The home building environment remains difficult and our current overhead levels are structured for a business that is larger than the market presently allows," said Richard J. Dugas Jr., Pulte's president and CEO. "We find it necessary to further reduce overhead expenditures, including, unfortunately, reducing an additional 16% of our jobs."
Pulte started telling the employees affected by the reductions on May 23 and all the reductions are expected to be complete by the end of June, according to an SEC 8-K document filed Wednesday (May 30) morning. The company will eliminate more than 1,800 jobs, leaving its head count at just over 10,000 employees, said Pulte spokesman Mark Marymee.
The rest of the restructuring, mostly related to consolidating facilities, should be finished by the end of the year. Marymee confirmed that roughly 11 of the company's divisions will be merged into other divisions. "We are not withdrawing from any market," said Marymee. "The important thing that we emphasize is that we continue in 50 markets in 26 states."
Pulte expects to reduce expenses this year by $90 to $110 million as a result of the layoffs, restructuring, and other spending cuts it has not elaborated on. That doesn't include the $40 to $50 million it expects to spend mostly in the second quarter for severance pay and other downsizing-related costs. By next year, the reorganization is expected to save the company $200 million a year.
Pulte lost $143 million in the first quarter of this year compared to a gain of $418 million in the first quarter of the year before. Its cash position has significantly eroded as well, from $551 million at the end of last year to nearly $117 million on March 31 of this year, according to its first quarter '07 SEC 10-K filing. The company has not tapped into its revolving line of credit.