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The Washington Post reports that Kimberly-Clark, manufacturer of Kleenex and Huggies, says that the windfall it will receive as a result of the new tax law will be used in part “to cover the costs of shrinking its workforce by as much as 13 percent as it shutters factories and reorganizes operations.” The company says it plans to lay off between 5,000 and 5,500 employees as it closes some 10 US manufacturing facilities.

According to the story, CFO Maria Henry “said the company’s gains from the tax overhaul would help offset the cost of the restructuring plan. The company had an effective tax rate of 28.6 percent in 2017, and the rate would drop to between 23 and 26 percent in 2018 as a result of congressional action, boosting year-over-year earnings growth by 6 points, she told analysts during a conference call to discuss recent financial results.”

Henry said, “We also anticipate ongoing annual cash flow benefits from tax reform. That provides us flexibility to continue to allocate significant capital to shareholders while we also fund increased capital spending and our restructuring program over the next few years.”
KC's View:
The fact of the matter is, price pressures from competition and efficiencies from technology mean that many companies are going to be restructuring their businesses - and that means cuts and closures. It is inevitable. And all the tax changes in the world won’t keep those factories open or keep those people employed … and will mean that shareholder dividends always will be a top priority.