Data & Research December 23, 2008

South Carolina Company Joins Those Suspending Match

Kemet Corp., a South Carolina company that makes capacitors for electronics products, has joined the ranks of those companies making compensation and benefits changes to offset the effects of the down economy.
Reported by

According to GreenvilleOnline.com, the firm announced Monday that it will cut pay for salaried employees by 10% at the beginning of the year and eliminate company contributions to its 401(k) retirement savings program to adjust for a bigger-than-expected sales decline. The moves should only affect about 400 workers at Kemet’s headquarters and research center in Simpsonville, and William M. Lowe, Jr., the company’s chief financial officer, said the company intends to restore the pay and retirement contributions when the economy improves.

In addition, Kemet announced it will lay off about 1,500 workers at plants in China, Europe, and Mexico—14% of its global work force—and reduce insurance benefits for about 1,200 retirees in the U.S., according to the report.

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

While relatively few companies have cut or suspended their 401(k) matches so far, more are considering the option (see “(k)Plans: Rough Cuts’).

Data & Research December 23, 2008

Unisys Cuts 401(k) Match

Unisys Corporation is suspending its 401(k) plan matching contribution to save $50 million annually as part of a series of cost-cutting moves designed to slash its expenses by more than $250 million.
Reported by

A Unisys news release said the company was also cutting 1,300 positions around the world and that the reductions had begun and were expected to continue through 2009. The company also plans to forgo 2009 salary increases in most of its markets.

The initial “cost-reduction actions are focused on reducing expenses and controlling or reducing labor costs across the board,” Unisys said.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

The company Web site statement said the expense cuts also include reductions in third-party expenses and facility consolidations.

“The cost-reduction actions are part of an overall program, led by new Unisys Chairman and CEO Ed Coleman, to simplify the company’s business structure, concentrate its resources more effectively, and drive improved market success and profitability,” Unisys said in the statement.

Unisys expects to take a fourth-quarter 2008 restructuring charge in the $80 to $85 million range to fund its consolidation.

According to a Reuters news report about the cutbacks, the Blue Bell, Pennsylvania-based Unisys has had an extremely difficult year with its shares plummeting around 88%. Last month, Standard & Poor’s removed the company from the S&P 500 index.

The company’s stock now trades at under $1.

While Unisys joins a number of other companies making the 401(k) match suspension move, most employers have not yet followed suit. A recent PLANSPONSOR survey found 58% of polled NewsDash readers were not planning any match changes (see “SURVEY SAYS: What Are Your Plans for Your Match?’).

«