Allied layoff details sketchy It's not known yet how many Maryland workers will be cut.

October 10, 1991|By Liz Atwood | Liz Atwood,Evening Sun Staff

Allied-Signal Inc. said it is too soon to tell how the company's decision to cut 5,000 jobs over the next 18 months will affect its workers in Maryland.

The company employs about 2,300 workers in the Baltimore area. Most of those jobs are related to the company's aerospace operations, which the company has targeted for cuts.

Allied-Signal spokesman Mike Ascolese said the company has not worked out the details of who will be laid off at each facility. Overall, the Morris Township, N.J., company expects to pare its management ranks by about 14 percent. They amount to about 4.7 percent of its total work force of 105,800.

He said most of the cuts would be made next year.

The company employs 1,400 in Towson at its Bendix Communications division, which makes aviation products; 800 in Columbia at its Bendix Field Engineering unit, which provides support services for aerospace; and 100 in Columbia at the Aerospace Technology Center, which supports the aerospace businesses.

Vickie Fultonberger, business representative for the International Association of Machinists and Aerospace Workers District 12, which represents 500 workers at the Allied Communications division in Towson, said she didn't expect the cuts to affect many of the union workers. "We know they are under a lot of pressure to cut midlevel managers," she said.

"I'm assuming that the effects on aerospace units will not be too severe."

Allied-Signal announced the layoffs yesterday as part of a restructuring plan initiated by the company's new chief executive officer.

The company said it would take a charge of $880 million against third-quarter earnings to pay for one-time costs from the restructuring, leading to losses for the quarter and year. It expects to report third-quarter results later this month.

Allied-Signal, a industrial conglomerate formed in a merger in the 1980s, said the plan would make it more competitive in its core businesses -- aerospace, automotive and chemical products.

Under the restructuring, it plans to sell eight non-core businesses, close at least 10 plants, consolidate support functions such as accounting and data processing, and cut capital spending.

It also said it would recommend that its board lower the quarterly common stock dividend to 25 cents from 45 cents a share.

The restructuring was engineered by new chief executive Lawrence Bossidy, the former vice chairman of General Electric, who took over Allied-Signal in June, telling investors and analysts that the company needed reshaping.

"This is clearly, clearly what he was brought in to do," said Laurence Baker, an analyst with Legg Mason in Baltimore.

Baker described Allied-Signal as a company that has "been consistently profitable, but it has not lived up to expectations."

The company has had gross profit levels of around 18 percent, compared with margins of 22 to 27 percent for similar companies.

Analysts, which had welcomed Bossidy's appointment as head of Allied-Signal, yesterday praised his decision to restructure the company.

"It seems like they're making some pretty good moves," said David Pizzimenti, an analyst at Nomura Securities in New York. Other analysts said they were raising their earnings estimates for 1992 and 1993.

The moves are expected to save $350 million a year, with some of that coming as early as 1992.

Bossidy and other executives explained the moves to analysts and investors here.

"This action plan will improve our profit margins, reduce the layers of management throughout the organization, provide resources for training to reduce cycle times and increase customer satisfaction in all of our businesses," Bossidy said.

The businesses to be sold include the Endevco sensors unit and the Airsupply division, both south of Los Angeles, the Barrday specialties fabrics business in Ontario, and an automotive filter operation in Brazil. The sales should generate about $300 million, the company said.

It also said it would close factories in Reno, Nev., and Salisbury, N.C., that are part of the Bendix Heavy Vehicle Systems group.

In his statement, Bossidy said he expected earnings to reach $3.60 to $3.85 a share next year. In 1990, Allied-Signal earned $462 million, or $3.35 a share, on revenues of $12.34 billion.

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