Kimberly-Clark to use savings from tax cuts to pay for layoffs

Kimberly-Clark to use savings from tax cuts to pay for layoffs

Kimberly-Clark — maker of brands such as Kleenex, Scott and Huggies — said the savings it receives from the new tax-cut law will help them pay for a restructuring program that includes layoffs.

The company said the restructuring initiative will involve reducing its number of employees by about 5,000 to 5,500 people, or 12 to 13 percent of its workforce. Kimberly-Clark also said it plans to close or sell about 10 manufacturing facilities. 

The announcement contrasts with other businesses, such as Starbucks and Walmart, that have said they will increases wages or issue bonuses in the wake of the tax law. President TrumpDonald John TrumpTrump: If there’s no wall, there’s no DACA fix Trump appears to call out Samsung over missing FBI text messages Trump Commerce pick told lawmakers he would look at reversing Obama move on internet oversight: report MORE signed the law in late December.

Senate Minority Leader Charles Schumer (D-N.Y) highlighted Kimberly-Clark’s announcement in a floor speech Wednesday as an example of “evidence that big corporations are not turning their new tax cut into jobs for the middle class.”

In an earnings call Tuesday, the company said it expects its effective tax rate to be between 23 and 26 percent in 2018 because of the new law, lower than in 2017. 

“We also anticipate ongoing annual cash-flow benefits from tax reform,” Kimberly-Clark Chief Financial Officer Maria Henry said on the call. “That provides us flexibility to continue to allocate significant capital to shareholders, while we also fund increased capital spending and our restructuring program over the next few years.”

Kimberly-Clark’s restructuring program comes amid increased competition and lower birth rates than it expected in the U.S. and South Korea, which impacts diaper sales.

The company said it expects to spend about $1.5 billion to $1.7 billion by the end of 2020 to implement the restructuring program.

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