As the coronavirus pandemic took hold this spring, Milwaukee-based Rockwell Automation Inc. instituted pay cuts for many of its employees in anticipation of lower demand from many of its industries.
Blake Moret, Rockwell’s chairman and chief executive officer, took a 25% salary cut. All senior vice presidents took 15% cuts and all other non-manufacturing employees around the world saw 7.5% pay cuts.
Rockwell had around 23,000 total employees around the world, including 8,600 in the U.S. as of September 2019, according to securities filings. Their median annual compensation was $57,907.
On Tuesday, Moret said he had hoped to be able to announce a firm end date for the cuts by now, but said that business conditions remain weak and the recent surge in COVID-19 cases is concerning.
“There is a limit to how long they can be in place,” he said, noting Rockwell would lift the cuts by the end of the year.
Lifting the cuts, which were intended to help the company avoid cutting jobs, may not be a good thing. Moret said if business challenges persist, Rockwell could be forced to explore more structural reductions in its costs.
The maker of industrial automation products reported a 16.3% decline in revenue for its third fiscal quarter to $1.39 billion. The quarter included a 17.6% organic decrease in revenue that was better than the 20% the company expected.
Moret said he expects to see a continued recovering in orders and sales in the next few months, but the virus will have more of an impact on when the company can restore pay cuts.
“At the heart of it is the infection rate and to look at how the countries in which we operate get the spread of infection under control, I think that’s the fundamental pacing item,” he said. “As that improves we will have a much more positive outlook.”
Moret expressed confidence in the long-term growth prospects for many of Rockwell’s key industries. An increased emphasis on health should boost life science industries. The food and beverage sector will remain important. While the company stands to benefit from growing investments in electric vehicles, Moret noted that even at the worst of the COVID-19 lockdowns the world was still consuming 60 to 70 million barrels of oil per day, another important market for the company.
Rockwell has also seen the coronavirus push manufacturers to build resiliency into their supply chains by making products in more than one place. In life sciences and medical industries, it is already showing up with plans for investment, he said, while other industries are simply increasing their level of discussion.
“I think it’s going to be gradual, but these are going to be longer term trends,” he said. “We are making some capacity investments in the U.S. to increase resiliency. In our case, it’s to build some of our high-value products in more than one place.”
