November 10, 2008

UPDATED: Racine's CNH Capital laying off 115 employees

Update: CNH Global Spokesman Tom Witom said Tuesday that CNH Capital was laying off 115 employees in its North American operations. He estimated it amounted to 10 percent of CNH Capital's worldwide operations; he didn't know what percentage of the North American operations the layoffs totaled.

Witom said at least half of the lay offs were occuring in Racine, but did not have an exact number. CNH Capital's office in Racine would stay open.

Witom, head of news and information for CNH Global, added that no press release would be issued on the layoffs.

"When we make an adjustment like this it's not a material event," he said. "If we downsize or hire 50-70 people we wouldn't make an announcement."

"It's still a difficult situation," Witom added.

The layoffs have started and will be occurring throughout the month, he said. They were caused by a downturn in the construction equipment market. They will not affect money available to CNH's dealers and customers, Witom said.

Witom's news differs from a high-ranking source we talked to within CNH Capital. Our source was confident the layoffs were between 125 and 150 employees. He also went into detail about financial dealings within the company that left them vulnerable to the recent market downturn. See our initial report below.

The JT is finally reporting the news here.

Here is our initial report:

Racine's CNH Capital is laying off 60 percent of its workforce this week, according to a company official with detailed knowledge of the decision.

The layoffs began Monday with human resources representatives meeting individually with employees and escorting them out of the building, according to the source. The workforce reduction amounts to between 125 and 150 positions. More than 100 of the lost jobs are in Racine.

A CNH Capital spokesman said Monday evening that a press release was going out Tuesday. He denied the company was laying off as many employees as we quoted, but our source said he was absolutely certain about the numbers. The spokesman declined to even confirm layoffs occurred Monday.

Employees in the inside sales, outside sales, marketing, credit, note processing, wholesale and retail positions were laid off, our source said. They added that no employee was sacred. People with years of experience and people with no experience were let go. They described the scene Monday as "devastating."

"It's so many people," our source said. "You had single moms losing their jobs, young parents with newborns who lost their jobs. The human tragedy in this is horrible."

The irony of the move is that CNH reported record profits of $252 million in its third quarter, and new CNH equipment is basically sold out for the rest of the year. But the roiling finance markets took its toll on CNH Capital, which lends money to equipment dealers and customers.

Here's a description from the company's website:
A global financing powerhouse. Today, CNH Capital delivers a wide array of financial products and services to well over half a million customers in North America, Latin America, Europe, and Australia. CNH Capital markets retail and wholesale financing products directly to customers and through the CNH global network of approximately 12,000 independent dealerships and distributors in 160 countries.

Our source said a complicated type of debt security known as Asset Backed Securitizations forced the layoffs. ABS's are basically debt sold as investments to outside companies. They resulted in instant payment for CNH Capital, but left the company's revenue stream vulnerable to outside companies. Now that market-weary investors aren't interested in buying ABS's, there's no steady stream of income companies like CNH Global.

CNH Global has the same amount of money to lend, it just doesn't have a way of selling those loans to investors for a higher profit, our source said.

They added CNH Global is basically projecting there is little money to be made over the next 1-2 years, and cut its workforce based on that assumption. Our source was left wondering about this "business strategy."

"You've gotta wonder what's wrong with these folks," he said about company leaders who made the decision.

Our source predicted company officials would release a statement Tuesday saying CNH Capital wasn't immune to the economic downturn and was reducing its workforce in the best interests of shareholders. They'll add that economic conditions have deteriorated to the point where we have to react, our source said.

They added the company did not anticipate the downturn well.

"In good times, you can hardly make a bad decision," they said. "In bad times, it's a question of how have you planned for the rainy day?"

18 comments:

  1. Three points
    1) Will they still be backing the Racine Promise? Why do I think NOT nor ever where talked to about it!
    2) The fear of Obama's true Marxist agenda is taking effect.
    3) Will the Son of God wave one hand or both to bring these jobs back or is Racine simply going to die as more manufacturing jobs leave, No I got it the one artist in the Uptown Art District is going to hire them all at the same rate of pay!

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  2. As a pensioner I am glad CNH is trying to remain profitable and prevent market value loss. I rely on my pension and IRA investments -parts of which are in CNH.

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  3. What the city really needs is a "colt relocation program".

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  4. Wow thin skin 10:58?
    Case is quickly going by by and of course its my fault. Perhaps the Son of God will strike me down.

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  5. Sad comment: "They added that no employee was sacred."

    That's the problem at CNH, they don't value any of their employees and treat them all like dirt. I got fed up and quit after 20 years of service and the response was "see ya".

    Too bad for the people affected, I hope they will be ok.

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  6. this is a horrible day for these people! please think of them and the issues they are going to face! CNH looks really bad!

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  7. But we have an Art District, soon a train, and The Son of God as President!! Nothing to worry about.
    Maybe now the powers that be will see the mess we are in and that by voting Obama in office the real fear of having a Marxist in power will drive business to cut costs and/or move.
    By 2010 my guess is 15% unemployed in the State with close to 30% in Racine.

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  8. Colt, do the world a favor and educate yourself before you post again.

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  9. I am going to enjoy the entertaint factor of Obama in office, too bad that my retirement funds my wife's 401K and many of our civil rights will not.
    Truly sad is that the 115 Case employees are just the tip of the iceberg of the coming Marxist agenda.
    Who will be left to pay for the higher sales tax for KRM, payroll tax for universal heath care,or property tax for the failing school system.

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  10. "When we make an adjustment like this it's not a material event,"

    - try telling that to the people that lost their jobs you jag

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  11. This is what happens when you put a bunch of dagos in a room that think they know American business. CNH is a company headed down the toilet.

    Those employees still with jobs should start applying elsewhere as its only a matter of time before you join your coworkers that got terminated today.

    CNH has treated their employees like $hit from day 1. Why people stay is beyond me.

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  12. It is good thing you capitalists are here to protect us Colt. The last 8 years of pure capitalism and top down economics have worked smashingly. By the way, I thought the party line was that Obama was a socialist, not a marxist. I guess if we keep throwing political terms ending in "ist" one of them will have to stick. Nice use of religious imagery, it help us to know your probably a bitter old white guy who can't get past the fact someone who doesn't look like him might have something to add. No one has claimed PRESIDENT OBAMA to be Jesus Christ, but he is a whole lot closer to it than McCain, the guy who left his wife after she was disabled in car crash, or President Bush II, the reformed drunk. Thanks for reminding me why I voted.

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  13. ...I saw 'layoffs' starting to happen there 6 weeks ago. I was one of them. When I heard about what has happened @ Capital today, I was just as sick to my stomach as I was the day I left there. How devastating. I guess none of us were as valued as we were told we were. As for the remark regarding 'the one artist..." I'm speechless. That was clearly an uneducated comment.
    Times like these are difficult enough without someone spewing offensive statements around.
    I would think it'd be better to say something suportive or shut the **** up.

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  14. First I am very sorry for offending anyone that was laid off from Case,that was not the point I was trying to make.
    The idea of bring in the Uptown Art Project was to show that the Government of The City of Racine and "Business" groups like RCEDC that focus on art projects are doing nothing to keep or bring jobs here.


    9:47

    And how is that vote for Obama working out for you? As more business understand what his MARXIST ideas will do to them followed up by the State of Wisconsin raising taxes to cover the 5 billion they need and new spending, how many do you think are going to stay?
    How is the Son of God going to make them?
    At least in 2010 The Conservatives
    will be back in power assuming there a country left.

    Bonus Points If the levy caps are removed just wait and see what the City of Racine will do.

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  15. concrete katie11/12/2008 8:23 AM

    Isn't this the company that was/is? looking for property in Caledonia? Are they still looking for property?

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  16. Nearly all the lost jobs were in Racine and that CNH SPokesmen knows it! They showed no respect for the individuals that were thrown out. They should be ashamed of how they treated other human beings.

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  17. I could have predicted this one. Most likely there will be more to follow in the other areas as well.

    IMHO, it's a sinking ship with very poor management and unhappy employees. Typically they just outsource to show a better bottom line. I'm sure more jobs will continue to go to outsourced vendors or Fiat in Italy.

    Need US experience, but no Visa is ready, no problem. You can go to work for Fiat and work at CNH. They will pay you through Accounts Payable and take away a job from an US employee.

    Live in the US and want to work for CNH, make sure you don't want to get a merit increase. Almost 40% of the workforce didn't get an increase even with good performance.

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  18. I'm not savvy on all this, but where was the union?

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