Kleenex, Huggies maker to cut up to 5,500 jobs, close 10 plants

Nathan Bomey | USA TODAY

Show Caption Hide Caption Kleenex and Huggies maker to cut more than 5,000 jobs As part of Kimberly-Clark’s restructure plan.

It's the height of an especially bad flu season, but the maker of Kleenex plans to close factories because it says facial-tissue sales are wheezing.

Kimberly-Clark, which also produces Huggies diapers, Kotex feminine hygiene products, Cottonelle toilet paper and Scott paper towels, plans to cut up to 5,500 jobs and close or sell about 10 plants. The Dallas-based company blamed sluggish sales and a bloated production base.

The company said it plans to shed $500 million to $550 million in costs before 2022 through a restructuring plan that involves "streamlining and simplifying its manufacturing supply chain and overhead."

The move comes after competitors slashed prices on tissues, damaging Kleenex sales in North America.

Savings from the recent federal tax cut would help fund the cost reductions. It "provides us the flexibility" to do so, Chief Financial Officer Maria Henry said on a conference call.

The job cuts represent about 12% to 13% of the company's workforce. The company said it would expand production at "several" other sites.

Kimberly-Clark declined to disclose the locations affected by the maneuvers. The company has operations in some 56 countries and about 43,000 employees, according to its website.

"The timing of those announcements will be determined by the needs of the business and appropriate consultation and/or negotiations with unions, works councils and other labor stakeholders," the company said in a statement to USA TODAY. "While not providing specifics, the proposed employee reductions will impact all geographies, business units and functions."

Kimberly-Clark reported a slight uptick in 2017 sales to $18.3 billion, while net income rose 22% to $617 million. But tissue sales have been declining, and a slower birth rate has hurt the diaper market.

The moves come after federal tax reform caused companies to recalculate their tax burdens. Henry said Kimberly-Clark's overall tax rate would fall to a range of 23% to 26%. It was 29.7% in the fourth quarter.

CEO Thomas Falk said in a statement that "we expect market conditions will remain challenging in the near-term."

"These are difficult but necessary actions to make Kimberly-Clark a stronger company going forward," Falk said on a conference call. "We will significantly improve our company for the long term."

Kimberly-Clark will also exit certain aspects of its business representing less than 1% of sales.

The company expects to record a pretax cash charge of $900 million to $1 billion in connection with the cuts as well as $800 million to $900 million in non-cash charges.

Huggies creates tiny diapers for preemies Huggies designed a special set of extra-tiny diapers to fit premature babies and newborns weighing less than two pounds.

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