A general slowdown in new home construction is trickling down to the manufacturing industry.
Black & Decker Corp. last week announced it laid off 70 salaried employees in its U.S. power tool division, with most of the job loss coming in its Towson facility.
Matthew Warren, a stock analyst with Morningstar Inc., seemed to predict Black & Decker?s move back in September.
“There?s no doubt that the residential construction and remodeling booms have juiced results,” Warren said in a recent report.
“As this stimulus now fades, Black & Decker must rely more on its increasingly flexible cost structure and exposure to other geographies and end markets like nonresidential construction.”
Warren said he expects Black & Decker?s other divisions, including Kwikset residential door locks and hardware and Price Pfister plumbing fixtures, to feel the pinch.
“After two years of rapid sales gains, we expect growth to slow dramatically in 2006 and actually decline in 2007,” Warren said. “We now project only 1 percent compound annual growth over the next five years.”
But, he said, the company is making smart moves during difficult times. “They have managed to keep real good control over their cost structure and the [layoff] move is reflective of that,” Warren said.
“They are adjusting to their end markets, which is appropriate.”
Black & Decker?s vice president of investor and media relations, Roger Young, said he couldn?t comment on future plans for the company, especially since the company will release its quarterly earnings report on Thursday. “In recent quarters, we have been seeing more difficult economic conditions,” Young said.
The layoffs aren?t expected to impact the Baltimore metro area.
Fronda Cohen, spokeswoman for the Baltimore County Department of Economic Development, said other manufacturing opportunities abound in the region, especially pharmaceutical and medical-device manufacturing.
“If you look overall at the entire Baltimore economy, it is not a huge impact,” she said.
