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Grove announces cuts

August 08, 2000

Grove announces cuts



By RICHARD F. BELISLE / Staff Writer, Waynesboro


SHADY GROVE, Pa. - Pay cuts, voluntary layoffs, reduced work schedules and the intent to sell one of its local operations were announced this week by management at Grove Worldwide, Franklin County's largest private employer.

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An in-house letter to Grove employees from Jeffrey D. Bust, Grove chief executive officer, called for voluntary pay cuts for all employees.

Keith Simmons, Grove senior vice president, confirmed the letter Tuesday, saying it affects employees "generally in all areas, office, salaried and shop."

Bust led the effort by announcing cuts in his own salary. Other managers are following suit, Simmons said.

Some employees will begin working a schedule that has them on the job for three weeks followed by a week off without pay. The workers will be eligible for unemployment benefits for the week they are out of work. They can also use vacation and sick pay.

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The work schedule will rotate to avoid interruptions in schedules and production.

The new schedule is expected to run through September.

Simmons said the company plans to sell its Technical Training Center in Blue Ridge Summit, Pa., as a cost-savings move. He said he did not know how many employees worked at the center.

The training center is used to instruct Grove customers how to use its equipment.

Grove's product line includes huge mobile cranes and aerial manlifts.

According to Bust's memo to employees, Grove will make no aerial manlifts between Thanksgiving and early January because of large inventories and slow seasonal sales.

Simmons said sales in the late fall and early winter are traditionally slow.

Simmons said that JLG Industries, a Grove competitor in the manufacture of aerial work platforms - with a main plant in McConellsburg, Pa. - has also cut production at the end of the year for the same reason.

JLG reported record third-quarter earnings, according to a report the company issued in July. Net income was up 5 percent to $34.1 million over the $25.6 million reported for the same period in 1999.

Meanwhile, Grove's financial picture continues to worsen.

Martin King, an industry analyst for Standard and Poor's, which has been rating Grove since April 1998, said Tuesday the same problems that have been plaguing Grove in recent years still exist. They include competition from Terex, an aggressive competitor in the North American crane market, and failure to improve production efficiency caused in part by delays in getting a software system on line. He said the problems persist in spite of Grove's competitive products and prices.

"Last year was a disaster for Grove," he said.

The beginning and end of the year are traditionally slow times for the industry, King said.

Christopher Mortel, an S&P spokesman, said Grove's BB-minus rating has now fallen to B-plus.

Simmons said while Grove's crane business in its European plants is excellent, the company's overall financial stance is weak because of its weakening domestic markets.

Grove will release its fourth-quarter report next week, he said.

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