CPAC Inc., trying to prop up its sagging commercial cleaning products business, plans to trim more than $1 million from the division and cut its sales staff, the Leicester-based specialty chemicals manufacturer announced Tuesday.
CPAC officials declined to disclose many details of the steps they are taking to come up with more than $1 million in cost savings, but they said the cutbacks were essential to bring the cleaning division's expenses in line with its declining sales and the costs borne by its competitors.
Most of the restructuring efforts are focusing on the commercial cleaning division's sales and marketing costs, said Wendy F. Clay, CPAC's vice president of administration.
The company is eliminating some jobs, mostly among its sales staff, although Ms. Clay declined to say how many positions were being eliminated. None of the job cuts are in Western New York. She said the company also is reducing other expenses, but refused to outline those steps.
"The first thing we needed to do was focus on the sales and marketing area. That was the most glaring," she said. "Our costs were out of line with our revenues and our competition."
Robert C. Isaacs, CPAC's chief operating officer, said the reduction in the division's sales and marketing costs should bring them in line with its revenues, which totaled $16.2 million during the quarter that ended in June.
The restructuring in the commercial cleaning business is the first phase of what could be several steps that CPAC takes to bolster its profits and improve shareholder value. The latest cost cuts come a month after the company said it was reviewing the recommendations made by an investment banking firm that CPAC hired to find ways to improve its performance.
"Certainly, they're looking at production synergies, etc., to see we we can improve production efficiency" at the commercial cleaning division's plant in Great Bend, Kansas.
CPAC officials had expected to increase sales and keep a tighter hold on expenses after the division shifted its cleaning chemicals business to the massive Fuller Brush Co. factory in Great Bend. But because of problems with the consolidation, the cost savings that CPAC officials had expected never came to pass, Isaacs said.
At the same time, the company's Fuller Brands cleaning and personal care products business slumped, with sales sliding by 6 percent during the first fiscal quarter and operating profits falling by 10 percent.