WHILE DUPONT IS MOVING ITS R&D TO INDIA AND CHINA IT IS LAYING OFF A BOATLOAD OF PEOPLE IN THE UNITED STATES:
DuPont to Eliminate 3,500 Jobs As High Gas Prices Take a Toll
By THADDEUS HERRICK Staff Reporter of THE WALL STREET JOURNAL April 13, 2004
Buffeted by high natural-gas prices in the U.S., DuPont Co. said it plans to cut 3,500 jobs, or about 6% of its work force, by the end of the year.
The move is part of a plan announced last year by the nation's No. 2 chemical manufacturer to cut costs by $900 million and focus on faster-growing markets, among them South America, Eastern Europe and Asia.
The Wilmington, Del.-based company said employees in North America and Western Europe will bear the brunt of the cuts, which are expected to save the company about $325 million a year. DuPont said it will eliminate about 3,000 positions and cut an additional 500 through attrition.
Though analysts said the number of job cuts were in line with expectations, union leaders said they had assumed no more than 2,500 positions would be eliminated. DuPont spokesman Clifton Webb said "the number is the number we determined is appropriate."
The company said it expects the move to result in a charge of about 17 cents to 19 cents a share, largely for employee-severance costs, adding that it will determine the exact charge during the second quarter.
Charles O. Holliday Jr., DuPont chairman and chief executive, said the moves are crucial to staying competitive. High natural-gas prices in the U.S. -- because of increased demand and a shortage of supply -- have put U.S. chemical makers at a disadvantage compared with those elsewhere. Chemical manufacturers use natural gas, and in some cases crude oil, as a raw material to make chemicals and to power their plants.
"These are difficult but necessary decisions," Mr. Holliday said.
DuPont's efforts to cut costs mirror those of Dow Chemical Co., the largest chemical maker in the U.S. and one of the few American chemical companies to significantly improve its results amid tough industry conditions. Dow Chemical did so last year in part by cutting 3,500 jobs, or about 7% of its work force.
DuPont's cuts, which will be spread across the company's business units, are expected to affect all levels of the work force, including management. Shares of DuPont rose 63 cents, or 1.5%, to $44.06 in 4 p.m. composite trading on the New York Stock Exchange.
The job cuts come in addition to the $4.2 billion sale of Invista, DuPont's textiles subsidiary, to Koch Industries Inc. in a deal scheduled to close by the end of this month. Invista has about 18,000 workers.
DuPont said it expects to save about $375 million in fixed costs by reducing spending in areas such as contract services, supply procurement, telecommunications and information technology, and another $200 million by focusing on higher-value products with lower energy costs.
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