Grace planning to cut 4% of chemical unit employees $100 million seen in annual savings

November 01, 1995|By Bloomberg Business News

BOCA RATON, Fla. -- W. R. Grace & Co. said yesterday it will cut more than 800 jobs, or 4 percent of its chemical unit employees, by the end of 1996 to save more than $100 million in annual costs.

The chemical and health-care company said it already has cut $50 million in costs this year and that it plans to shave another $50 million in costs next year.

The moves are intended to increase profit margins and make it more competitive, Grace said. The company's 10.1 percent operating income margin over the last four quarters is less than the 11.7 percent posted by Dow Chemical and the 11.4 percent posted by DuPont.

"Our actions to reduce costs and streamline our organizational structure will improve operating margins and thereby further enhance our competitive edge and market leadership positions," said Albert J. Costello, Grace's chairman, president and chief executive.

The company will take unspecified restructuring charges in the third and fourth quarters. Grace plans to announce its third-quarter earnings later this week, said spokeswoman Mary Lou Kromer. She wouldn't be any more specific on the size of the charge.

W. R. Grace has 20,000 employees, excluding the 14,000 employees of its National Medical Care Inc. subsidiary, which is scheduled to be spun off to shareholders.

More than 50 percent of the company's cost reductions will come from corporate staff functions, the company said.

Ms. Kromer said the emphasis on cutting corporate staff will cut into research and development spending, which is likely to mean some layoffs at Grace's facility in Columbia. But she said she could not say how many people are likely to be cut locally.

Grace also operates a production plant in South Baltimore. Ms. Kromer said some cuts are likely there as well, but she said the company is focusing more on downsizing factory administration than its production work force.

She did not have the current number of Maryland-based Grace employees, but the company put the total at 1,500 earlier this year.

The company said it will provide career counseling, severance pay and other support services to employees who are fired.

The job-cut announcement was made after the close of trading. Shares in W. R. Grace closed yesterday down 87.5 cents, at $55.75.

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