With all the stories about economic recovery recently, it might be easy to overlook the not so uplifting accounts that are still entering the news. Although the outlook is bright overall, many people, whether out of necessity or simply by choice, are still spending less. Naturally, this decrease in spending is hurting some consumer-driven industries. Just this week, LoJack, leading vehicle security provider, decided to cut 46 jobs at its Westwood, Massachusetts headquarters. (Image courtesy: http://bit.ly/9Zp5fD)“We regret the hardship that this restructuring will have on affected employees, but believe these actions position us well to meet the changing dynamics of the automobile marketplace,” Richard T. Riley, LoJack’s Chairman and CEO said. “We remain focused on our core domestic auto and international licensee businesses, while continuing to build our Italian subsidiary and the LoJack SafetyNet business, which serves those with autism and Alzheimer's.”
LoJack’s layoff is expected to save the company $3.5 million this fiscal year and $6.8 million annually from 2011 on. For the past two years, LoJack has reported financial losses. Shortly after the announcement of the layoff, the company’s share price rose 5.4%, or 20 cents, to $3.92.
“The stabilization in the global auto market over the last few months has been encouraging. We continue to expect a moderate year over year increase in revenue, modest profit, positive operating cash flow and healthy margins for 2010,” Riley explained. “Our revenue growth will be gradual and will be concentrated in the second half of the year.”
It is not surprising that a business like LoJack, which is complimentary to the automotive industry, is struggling right now. It seems that this is one of those cases when laying off people is the lesser of two evils, as it will help decrease the company’s costs, ultimately increasing its odds of profiting and staying in business. Hopefully, this layoff, while unfortunate, will allow for a substantial hiring in the future when things begin to turn around for the company.
[Sources: http://huff.to/9m8K9C, http://bit.ly/9wXWdq]
