Sales slump forces Amway to cut jobs

Asian troubles cause ripples in Michigan

Free Press, November 21, 1998
By Boaz Herzog

Amway Corp.announced Friday it will shed 10 percent of its U.S. workforce, including 410 employees in Michigan, through job cuts and early retirement.

The home- and personal-care products distributor said Friday that 180 jobs will be cut at its world headquarters in the west Michigan town of Ada.

Another 70 jobs will be eliminated in California, Colorado and Nevada. Additionally, 291 employees -- 230 in Michigan -- already have chosen to accept an early-retirement program. With the reduction, the employee count in Michigan will drop from about 5,200 to 4,800.

The job cuts, which Amway President Dick DeVos called "an absolute necessity," come amidst a company restructuring and a weakening demand for Amway products in economically troubled Asia, where the company does nearly half its business.

"The benefits, long-term, will be significant as we emerge from this restructuring with a smaller, more-focused organization," DeVos said.

He said he expects next year to be a "transition year, given the softness of the Asian market." Although he expects sales to be flat, DeVos said he does not expect further job cuts. A faster development cycle for new products and the launch of an Internet site in the next year will help turn the company around, he said.

"This was an especially difficult step for Amway to take because we've worked with many of these employees for so long," Amway Chairman Steve Van Andel said in a statement.

Those losing their jobs -- mostly administrative workers -- will receive full wages through the end of the year and a severance package based on their position and years of service. They also will continue to receive life and health insurance through the end of March.

Amway reported its global sales dropped 18 percent in fiscal 1998 to $5.7 billion, the first decline since 1984. The figures represent combined results from 49 markets served by privately owned Amway and its publicly traded affiliates, Amway Asia Pacific Ltd. and Amway Japan Ltd.

The company, with a direct-sales force of three million people worldwide, said 85 percent of the sales decline could be attributed to factors associated with the strong U.S. dollar and the weak Asian economy.