MANUFACTURING
Gibraltar halts 401(k) matching
Gibraltar Industries has stopped making matching contributions to its workers’ 401(k) accounts as the Hamburgbased building products and steel processing firm grapples with deep slumps in its key housing and automotive markets.
Gibraltar has informed employees that it will discontinue the matching contributions indefinitely on April 17.
“While this has not been an easy decision for the company to make, it is a necessary business decision in light of the current economic environment,” the company said in a memo to employees that was obtained by The Buffalo News.
Gibraltar executives could not be reached to comment on Tuesday.
Gibraltar made the change to reduce 401(k) benefits for its workers after the company posted the biggest quarterly loss in its 16 years as a public company during the fourth quarter and is facing further losses during the quarter that ended Tuesday.
The company made significant cuts to its staff at its Hamburg headquarters last month. To conserve its cash, the company in February suspended its 20 cent per share annual dividend to save $6 million and cut its capital spending plans. With demand down, many of the company’s facilities are operating only one shift or are running on a shortened work week, executives said during a February conference call.
Gibraltar’s corporate credit rating was cut earlier this week by ratings agency Standard & Poor’s Corp. because of concerns that its main housing and auto markets will remain weak. That could put the company in jeopardy of violating some of the terms of its borrowing agreements later this year.
Tobias Crabtree, a Standard & Poor’s analyst, said he does not expect Gibraltar to breach the terms of its borrowing agreements, but its weakening financial performance could force it to accept revised terms on its loans, which could increase its interest expenses. Gibraltar’s credit rating was cut to B+, which is four notches below investment grade, from its old speculative rating of BB—.
Gibraltar joins a growing list of companies that are cutting back or eliminating their contributions to worker 401(k) accounts as a way of saving money during the recession.
A survey of 150 major U. S. companies released last week found that a little more than a third have reduced or eliminated their matching funds to employee 401(k)s, while another 29 percent plan to do it in the next year, according to benefits firm the Spectrem Group.
More than 130 companies have cut or temporarily suspended their 401(k) contributions since the beginning of the year, according to the Pension Rights Center, which tracks changes to employee retirement savings plans.
Companies with local ties that have cut back or suspended their 401(k) contributions include Bon-Ton Stores, General Motors Corp., Stein Mart, Penn- Traffic Corp. and Paychex Inc.
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