Thursday, January 25, 2018

When tax cuts cut jobs

 5,500  workers at Kimberly-Clark the maker of Huggies, Kotex, Kleenex and Depend, revealed its restructuring plans on January 23, and explained mass job cuts were made possible because of the GOP tax cut. The personal care company plans to cut about 13 percent of its workforce 

Kimberly-Clark’s CFO Maria Henry said that the GOP tax cut bill's “cash flow benefits” to the company will assist in paying for the layoffs and that “tax savings would also be used to make capital investments and to ‘allocate significant capital to shareholders,’”.  Some of the savings are expected to be used for severance packages for workers and other restructuring costs.


While the need for the restructuring may be due to market forces demanding competitive lower prices, and the societal forces of a decreased birth rate in some countries (and thus less demand for some of Kimberly-Clark’s products), the job losses are uniquely tied to the recent GOP tax bill, which provided cuts for corporations.


Kimberly-Clark also plans to shutter or sell 10 manufacturing plants as part of the restructuring, in an attempt to “generate annual cost savings of $500 to $550 million by the end of 2021.” The restructuring announcement comes in combination with the company's FORCE program (Focused On Reducing Costs Everywhere).


Bank of America announced it would do away with free online checking accounts, despite its expected $3.5 billion tax cut, while companies including Verizon and Exxon Mobil said before the law was passed that their savings would go to their shareholders.

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