Hertz Global Holdings Inc., the operator of the world's largest general use car rental brand, and one of the largest equipment rental businesses in North America, announced Jan.16, that as part of a comprehensive plan to further decrease costs, the company, during the fourth quarter 2008 and through the first quarter 2009, is reducing its global workforce by more than 4,000 employees.
The cost reductions are attributable to reduced rental demand and Hertz continues to reengineer work processes using Lean Sigma techniques to drive efficiencies. There will be job reductions in the car and equipment rental businesses, corporate and support areas, and in all geographies, with an emphasis on eliminating non-customer facing jobs.
The workforce reduction is expected to generate annualized costs savings in the range of $150 million to $170 million in 2009, and the company expects to take a charge in the fourth quarter 2008, related to these job reductions, in the range of $20 million to $25 million. The company previously announced, on Nov. 6, 2008, that it had reduced its workforce by 22 percent since August 2006 and, with these latest reductions, the workforce will be 32 percent lower than in August 2006.
Mark P. Frissora, Hertz chairman and chief executive officer, said, "Volume, pricing and residual values continued to decline during the most recently completed quarter, and we cannot predict when our markets will improve. As a result, we continue to take aggressive action to align our costs, including wage and benefit expenses, with business conditions. We will continue to utilize Lean Sigma techniques to reengineer important business processes to drive further efficiency. We are committed to our global airport and off-airport car rental and equipment rental businesses, and we are prepared to add necessary resources when the operating environment improves. Our actions will help ensure the company remains financially strong; I'm especially pleased to report that our liquidity was approximately $4.9 billion as of Dec. 31, 2008, and we expect to generate total net cash flow of approximately $1.75 billion for the fourth quarter of 2008," he added.
The company said that fourth quarter 2008 total net cash flow improved year-over-year and liquidity improved sequentially from the third to the fourth quarter of last year by approximately $300 million in an especially difficult fourth quarter 2008 operating environment.