Ten manufacturing positions at W.R. Case & Sons Cutlery Co. were eliminated Wednesday, while 39 workers at Zippo Manufacturing Co. have taken a voluntary layoff.
And both companies will add two days each to the annual holiday shutdown, explained David Warfel, vice president of global marketing for Zippo.
Referring to Case, Warfel said, “December 2, manufacturing will be off and on December 5, we will determine if we will also shut down on December 9.”
Several factors went into the decision, he said.
“Sales for the entire knife category are down. Case, as well as most other knife manufacturers, is affected by an unexpected softening in consumer demand,” Warfel said. “There have been a number of reasons why this has happened at this time but we are highly confident that with the aggressive sales forecasts for holiday spending will have a positive effect on sales.”
He explained the “sell through isn’t what we’ve normally expected in this three-month period.”
Other knife companies have lost some contracts with major retailers, which has impacted the entire knife category. “This is impacting the corner knife store as well as the big guy,” he added.
Warfel explained Case has spent a lot of time and money on upgrading the plant and becoming more efficient.
“Over the course of the last couple of years, we’ve invested very heavily in new equipment and changing the manufacturing process,” he said. “We are better able to provide more knives quicker than we’ve ever been able to do before.
“One of the problems when you get better at doing something is you don’t need as many people to do it anymore,” Warfel said, lamenting about one of the more difficult aspects of business.
He said the ten positions have been eliminated from “what we collectively call operations. Generally those with lower standing, the new hires, are the first that have to be considered.”
At Zippo, sales are slower than normal, and the company is taking this opportunity to reduce its inventory.
“The summer months tend to be historically slower consumer-wise,” Warfel said, explaining Zippo has offered a voluntary summer leave in the past. This is the first time a winter leave is being offered.
The three-month leave was voluntary, Warfel reiterated, saying the company anticipated about 20 people would take it. “When they were presented the opportunity, and told they would keep all benefits and seniority, people were excited,” he said. Three months off over the holidays was a chance 39 people jumped at, he added.
“We do know, and everyone was keenly aware, should there be a change in demand, your vacation is being cut short,” Warfel said with a laugh. “They have to understand they can’t leave the country.”
At this point, Zippo officials estimate the leave to be three months in length. “We know how much product we have in inventory. As product leaves inventory, generally we replace it with new product. Because of a number of factors, instead of having a six-month inventory, we’re going to draw down on it.”
Should demand pick back up, it wouldn’t take long to have everyone back at work.
“We can replenish the pipeline more quickly than we have in the past,” he said.
“Market demand remains strong in most key markets. However, we believe it is both prudent and proactive to manage inventory levels at this time, so at a later date, more critical staffing adjustments will not be necessary,” he explained.
“Over the past years, Zippo has gained independent control of over 70 percent of global distribution and sales,” Warfel added. “With this control we have an immediate understanding of most market inventory levels and have gained the flexibility to adjust product build in real time, rather than be dependent on information provide through third-party resellers.”
