by Calculated Risk on 12/12/2006 09:43:00 PM

From the New Haven Register: Hubbell to cut 1,000 jobs

In a conference call, President and CEO Timothy H. Powers said Hubbell is laying off 1,000 employees in response to plunging demand for its products — electrical, lighting and telecommunications equipment as well as construction materials and test and measurement systems.

"We are seeing weakness in our business, with lower-than-anticipated orders in both residential and non-residential construction and the utility sector," Powers said.

It appears all sectors of construction are slowing:

Orders for nonresidential construction, which accounts for 40 percent of Hubbell’s revenues, have slipped in both square footage and contract awards in recent months, the statement said.

Residential construction — 15 percent of Hubbell’s business — is showing "more weakness than previously forecast," Powers said.

And the utility sector — 23 percent of Hubbell’s business — is seeing lower order rates, largely due to a quieter than normal storm season.

With the abrupt slowdown, Hubbell has gone from overtime, to standard workweeks, to layoffs in the span of eight weeks:

The broadening slowdown became apparent over the last eight weeks, Powers said.
...
"As little as eight weeks ago we had been pushing very hard in many of our plants to catch up with deliveries that were late, particularly in the lighting area," Powers said. "Then we went from overtime to standard workweeks to layoffs."
...
"We have seen a quite rapid and sudden slowdown across the board," Powers [said]. ... "Residential building is slowing at a rate much faster than everybody predicted, and (a slowdown in lighting sales) has accelerated dramatically. It’s an unpleasant surprise."

Click on graph for larger image.

This graph shows housing starts (shifted 6 months into the future), completions and residential construction employment. Residential construction employment tracks completions, and completions follows starts by about 6 months.

Completions were still near record levels in October; just 6 weeks ago. No wonder Hubbell was working their employees overtime. But now completions and employment should follow starts off the cliff, and Hubbell is responding by laying off employees.

Also note that Hubbell reports nonresidential construction is soft.