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Zep Inc., a leading producer, marketer and service provider of a wide range of cleaning and maintenance solutions, on December 8 announced that, as a result of significantly lower customer orders, it is reducing non-sales headcount by 5 percent. The company unexpectedly began experiencing a significantly lower order rate in October as a result of general economic conditions while continuing to experience high raw material input costs. The company initiated a new set of non-sales headcount reductions in November and is expected to have most of these reductions complete by the end of its second fiscal quarter.
As a result of this workforce reduction, the company expects to report a restructuring charge of approximately $1.9 million in the first fiscal quarter of 2009, which ended November 30. In addition, the company announced an immediate hiring freeze of all non-sales positions throughout the organization.
John K. Morgan, chairman, president and chief executive officer of Zep Inc., stated, “In response to widely publicized economic headwinds, weaker-than-expected volumes, and continued high raw material costs, we made the decision during the first quarter to reduce our workforce. While this was a difficult decision, we are operating in a rapidly declining and much broader economic downturn than we initially anticipated and believe it was prudent to reduce our cost structure in response. In addition to the workforce reduction we have already begun implementing, we will further reduce our costs in other areas as necessary. These are never easy decisions to make, and I certainly understand the impact this will have on our associates. Despite this reduction in our staffing levels, we believe it is important to continue to seek and hire experienced and qualified sales representatives.”
Zep Inc., with fiscal year 2008 net sales of more than $575 million, has a product portfolio that includes anti-bacterial and industrial hand care products, cleaners, degreasers, deodorizers, disinfectants, floor finishes, sanitizers, and pest and weed control products. The company markets these products and services under well recognized and established brand names, such as Zep, Zep Commercial, Zep Professional, Enforcer, National Chemical and Selig, some of which have been in existence for more than 70 years. Zep is headquartered in Atlanta.