Stihl Furloughs 30% of US Workforce; Sends Employees Home Via Text

STIHL Inc., the world’s top chainsaw manufacturer, has announced plans to furlough approximately 30% of its workforce at its Virginia Beach facility, affecting around 550 to 600 employees. The decision to implement these furloughs was attributed to the company’s response to “softening market conditions,” as confirmed by spokesperson Stephanie Friess. 

Furloughs, as opposed to layoffs where jobs are cut, are a form of mandatory temporary unpaid leave of absence.

“The duration of said furloughs will respond directly to anticipated improvements in the market. We are committed to supporting our affected employees during this time and will work tirelessly to return all employees to normal work status as soon as possible,” Friess told local publication WAVY.

This comes within a year of STIHL Inc.’s announcement of a $49 million investment for the expansion of its Virginia Beach plant. This decision also follows the parent company’s record-breaking revenue of $5.97 billion in 2022. 

Employees who preferred to remain anonymous told WAVY that their work schedules had been curtailed to just four days a week. They expressed feeling that “we’re making too much product and we have too many people in the building” within the Virginia Beach facility, which serves as the US headquarters for the German company.

During the pandemic, STIHL’s business experienced a surge due to increased demand for home improvement and landscaping products. As individuals returned to work, production remained elevated, leading to an accumulation of inventory. 

Bob McNab, Chair of the Department of Economics and Director of the Dragas Center for Economic Analysis at Old Dominion University, suggested that the company’s actions could be a response to a sluggish housing market caused by historically high mortgage rates.

The furloughs affect various product lines, with the exception of the department responsible for battery-powered items. In a previous earnings report, CEO Michael Traub expressed the company’s aim to make 80% of its product line battery-powered by 2035.

Employees at the Virginia Beach plant were suddenly dismissed on Wednesday, with instructions to return on Monday. 

The company’s message to employees on Wednesday | Via WAVY

All employees, regardless of their furlough status, were required to leave and will receive compensation for Thursday and Friday. Furloughed workers are expected to receive two weeks’ pay, and the duration of the furloughs is anticipated to range from four to 16 weeks.

Information for this story was found via WAVY, The Virginia Pilot, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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