DuPont to cut 1,300 jobs in coatings unit

Company will close 6 Herberts plants in Europe, Mexico, Brazil

Manufacturing

July 08, 1999|By BLOOMBERG NEWS

WILMINGTON, Del. -- DuPont Co. said yesterday that it will cut 1,300 jobs, or 8.7 percent of the work force, in its coatings unit as it integrates the Herberts paint business it bought for $1.8 billion from Germany's Hoechst AG.

DuPont, the biggest U.S. chemical company, said it will shut six Herberts plants in Europe, Mexico and Brazil and shed 500 manufacturing jobs and 800 corporate positions over the next nine months.

The moves were anticipated at the time of purchase and won't hurt 1999 earnings, the company said.

DuPont became the world's No. 1 maker of automotive paints and the third-largest maker of coatings when it bought Herberts in March. It said at the time that it planned to eliminate overlapping operations in the unit to help trim costs. Yesterday's announcement marks the third job-cutting program at DuPont in a month.

"This is really a one-time house cleaning from the acquisition, rather than a reflection of business conditions in coatings," said Sergey Vasnetsov, an analyst at Lehman Brothers Holdings Inc. "The other job cuts were because of poor conditions in specific markets."

DuPont shares fell 81.25 cents to $69.9375. Still below their five-year high of 84.4375 reached May 22, 1998, the shares have recovered in recent months from their 52-week low of 50.625 posted March 3.

The company, which has 92,000 employees worldwide and 15,000 in its coatings business, said last week that it would cut 800 jobs in its crop-protection chemicals business, and in June it announced that it planned to eliminate 1,400 jobs in its money-losing polyester unit.

DuPont Chairman and Chief Executive Officer Charles "Chad" Holliday told investors in March that the company would reduce its 1999 capital budget 13 percent, to $2 billion from $2.3 billion, last year as part of a plan to improve profits this year.

Per-share profit at the company fell about 6 percent last year on lower prices for chemicals and cheaper imports from Asia. The maker of Imron-brand industrial finishes formed a new unit called DuPont Performance Coatings when it combined its coatings business with Herberts. The unit is the world's third-largest maker of paints, finishes and other coatings, with annual sales of about $4 billion.

"This action is necessary to streamline operations and improve productivity so that we can maintain our leading position in the highly competitive coatings industry," said Louis Savelli, president of the coatings unit.

The company will close Herberts plants in Piobesi, Italy; Caieiras, Brazil; Dagenham, England; Ocoyoacac, Mexico; Porto, Portugal; and Saffle, Sweden, shifting production to other plants.

Pub Date: 7/08/99

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