Allied-Signal to cut 5,000 jobs, close plants

October 10, 1991|By Kim Clark

Allied-Signal Inc., a New Jersey-based conglomerate with aerospace businesses in Maryland, said yesterday that it would cut its salaried work force by 5,000 people, close plants and slash its stock dividend in order to conserve cash.

Michael J. Ascolese, an Allied spokesman, said the company hasn't decided where the staff cuts will be made or which plants will be closed.

But in a written statement, Allied said that the most significant cuts would hit the company's aerospace and automotive divisions.

Allied has 3,600 employees in Maryland, most of whom work on defense and aerospace products for the company's Bendix division.

Local managers of Allied operations did not return telephone calls yesterday. But union representatives of the approximately 500 assembly workers at Allied's plant in Towson said that hourly factory workers there were told they would not be laid off.

Ada Evans, president of the International Association of Machinists, said company officials told her "we would not be hit." Business at the Towson plant has been good, she said, noting that the company even hired an additional 25 workers last month. Workers at the Towson plant assemble fusing devices for Patriot missiles and make communication equipment for aircraft.

But, Ms. Evans said, some local managers may be laid off. "As I understand it, they feel they have more chiefs than Indians, so to speak. And in certain cases, they might have," she said.

The Bendix division in Towson has 1,400 employees. A Bendix field engineering division center in Columbia, which provides services for the aerospace industry, employs 800. In addition, the company has microelectronics and aerospace technology centers in Columbia, each of which employ about 100 workers. )) Allied also has several hundred workers at clients' operations around the state, Mr. Ascolese said.

Though Allied has been consistently profitable through the recession, its earnings have fallen dramatically. And company officials say they have to act quickly because demands on cash, such the cleanup of chromium waste at the Allied Chemical site in Fells Point, will likely outstrip the cash the company expects to generate.

"We are making money over the long term," Mr. Ascolese said, "but we are having to borrow to meet our short-term expenses."

To pay for the moves announced yesterday, the company said, it will take a $880 million charge against its third-quarter earnings. The charge will probably cause the company to end 1991 in the red, Mr. Ascolese said.

Besides the layoffs, Allied said it would:

* Close automobile and truck part manufacturing plants in Reno, Nev., Salisbury, N.C., and eight unspecified sites.

* Sell businesses such as a Canadian fabrics company and a Brazilian automotive filter operation. Allied hopes to raise $300 million from the sales.

* Reorient several operations. For instance, it will refocus the fluorine products group on substitutes for chlorofluorocarbons and the anti-lock braking systems company to a new type of brake.

* Cut the quarterly dividend from 45 cents to 25 cents.

* Cut capital expenditures by $225 million a year.

Investors applauded the move, driving the company's stock up $4.25 in New York Stock Exchange trading to finish the day at $40.375.

But not everyone was pleased with the move.

Francis L. Casey, Jr., who follows Allied's stock for the New York investment firm of Baird, Patrick & Co. Inc., said that while the moves by Lawrence A. Bossidy, Allied's new chief executive officer, were expected and laudable, they might not turn the company's profits around.

Mr. Bossidy, who joined the company from General Electric Co. in July, "has a good background, he's very capable," Mr. Casey said.

But, Mr. Casey said, Allied is stuck with businesses and markets suffering badly from the recession: chemicals, automobiles, defense and aerospace.

"I don't see where growth is going to come from in the next few years," he said.

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