Callaway came out of a two-year retirement to resume the role of top executive
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Phil
CARLSBAD, Calif. (AP) _ Hoping to chip its way out of a rough stretch of dismal earnings, Callaway Golf Company is cutting 700 people from its workforce and abandoning ventures like high-tech driving ranges and book publishing.
The move announced Wednesday was the latest sign that golf equipment markets aren't up to par and the $20 billion industry is struggling.
''I'm not saying there is less interest in golf,'' said Ely Callaway, 79, who grew his company from a small manufacturer of hickory-shafted putters and wedges to the world's largest maker of premium titanium clubs known as Big Berthas.
''I think interest will grow and these depressed conditions are temporary, but we haven't seen anything like this since the company was founded 16 years ago,'' he said.
Last month, Callaway came out of a two-year retirement to resume the role of top executive after the company fired its highest-paid employee to cut costs and refocus the company. In July, 300 temporary jobs were cut.
He said golf club sales abroad were hard hit by ailing Asian markets, and domestic sales suffered from increased competition and lower pricing.
Callaway slightly dropped it wholesale prices in May in an effort to compete, but the company won't do it a second time. ''We will retain our prices and standards,'' Callaway said.
The company's board of directors decided the best was to make Callaway profitable was to bring it back to its original focus: golf clubs and golf balls. A new line of golf balls, under development for the past two years, is expected to hit the market by late 1999 or early 2000.
Callaway said the job cuts will save the company $40 million annually. The employees who lost their jobs Wednesday were full-time workers; they represent about 24 percent of Callaway's workforce. The number of employees will drop to 2,200 by January.
Employees will receive eight weeks of severance pay, medical insurance for their families through April and career counseling through Jan. 1, Callaway said.
In July, when the company saw its first down quarter since it was founded in 1982, Callaway hinted to financial analysts that reorganization was possible. He also said he thought the market would remain flat through 1999.
The company's board of directors asked Callaway in October to return as president and chief executive officer to see the company through the next two years. Donald H. Dye, who spent 24 years at Callaway, was fired from the top position but remains as a consultant.
Gar Jackson, publisher of ParValu, a golf stock newsletter, said the restructuring was expected, but the firing of Dye and return of Callaway was a surprise.
''We've seen layoffs at Cobra and we've seen layoffs at Taylor Made, it was just a matter of time until it happened at Callaway,'' he said. But ''with Ely Callaway back with the company, we're going to see much more focus with getting the company back to profitability.''
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