According to Bloomberg News, Berkshire cut 16 percent of the workforce of manufactured housing builder Clayton Homes Inc., while Shaw Industries, the largest U.S. carpet-maker, slashed 6.2 percent of its staff. All told, about 80 Berkshire units have cut jobs, including the maker of Benjamin Moore paint and recreational vehicle maker Forest River Inc. The company does not expect the economy to show improvement until 2010. Berkshire's holdings employ more than 246,000.
A Berkshire SEC filing mentions that its companies "will continue to take cost reduction actions in response to the current economic situation, including curtailing production, reducing capital expenditures, closing facilities and reducing employment."
None of this comes as a surprise to long-time Buffett watcher Thomas Russo, a money manager who has owned Berkshire stock since the early 1980s. Berkshire will "be as careful as any in their approach to downsizing but the {businesses) will have to be downsized," he said in an interview. "There is a need to reset their cost structures."
Buffett, who is famous for leaving the day-to-day affairs of his businesses to his management teams, is still beloved by many on Wall Street. Though he seems like everyone's rich uncle, Buffett has never claimed to be anything more than a businessman. For him, it's all about the bottom line.
But investors these days are not the patient lot Buffett says they should be. Shares of the Omaha-based company are down about 46 percent this year. The shares are trading a "close to book value," which Russo said is unusual.
"I am confident of the long-term value of his holding, as reasonably priced as it has been," he said. "Rarely has it ever been close to book value."
