DUPONT DISPOSING OF 1,500 JOBS, PRIMARILY IN U.S. FIBERS UNITS
Byline: Stuart Chirls
NEW YORK — Amid rising costs and increasing competition, DuPont said Thursday it will eliminate nearly 1,500 jobs in its fibers division, most of them in the U.S.
About 900 jobs will be lost in DuPont’s Nylon North America unit, and 300 in its Dacron polyester manufacturing operations. Several hundred outside contractors also will be terminated.
DuPont expects 800 employees to leave through “involuntary separation programs,” while another 400 will be reassigned elsewhere in the corporation, will displace existing contractors or will be eliminated through normal attrition.
DuPont will take a first-quarter charge of approximately 5 cents per share, or $27 million after taxes, to cover the costs of employee layoffs.
In a conference call with the media Thursday, executives said the layoffs are part of a broad commitment to slash costs and streamline DuPont’s infrastructure. When asked if that included further job cuts in fibers, Ned Jackson, vice president and general manager of DuPont’s Dacron polyester operations, said, “We want to do everything we can to stay the most cost-effective fiber producer in the world. It’s hard to say if that means more jobs.”
Gary Pfeiffer, vice president and general manager for Dacron, said, “The race for cost leadership is never-ending, but I don’t think we’re going to see any more large reductions in the workforce in North America.”
The layoffs are the second in three years at the fibers division. As part of a company-wide cost reduction program, DuPont announced a cut of 2,900 jobs in its nylon business in the U.S. and Europe in 1993.
Jackson said the latest round of layoffs will reduce operating costs in Dacron by about 20 percent, saving DuPont $100 million “over the long term.” Costs will shrink by about 10 percent in nylon, although Pfeiffer declined to quote a dollar figure.
Despite an aggressive program of worldwide expansion, DuPont has been feeling the heat from leaner, more nimble fiber producers and a softening polyester market through the end of last year. In the fourth quarter of 1995, DuPont’s operating income after taxes in fibers slipped 1.6 percent to $188 million from $191 million, while sales gained 4.5 percent to $1.8 billion. For all of 1995, fiber profits rose 17.6 percent to $795 million and sales were up 7 percent to $7.2 billion.
Discussing the nylon sector, Jackson said, “There has been more competition from smaller nylon suppliers around the world, but we have felt it especially in North America.”
Both Jackson and Pfeiffer denied that a slowing market for man-made fibers hastened the job cuts. “It definitely was not because of a weak demand,” Jackson said. “We are continuing to work on our cost structure to make us a stronger, more productive company.”
DuPont’s nylon sales volume is actually larger today than it was a year ago, Pfeiffer said. “This is part of fundamental business improvements and practices.”
The layoffs will affect workers throughout the fibers operations. In nylon, about 40 percent of the layoffs involve managers and other professionals; in Dacron, about 30 percent are white-collar jobs. Nylon is one of DuPont’s largest divisions, with 19,000 employees worldwide, while Dacron employs about 3,500 workers. Most of the layoffs are expected to be completed by April, and the rest are to take effect no later than October. DuPont will offer between two months’ and one year’s severance pay, depending on seniority, as well as other benefits and retraining assistance.
While Wall Street usually applauds downsizing moves these days, shares of DuPont on the New York Stock Exchange fell 1 1/4 Thursday to close at 76 1/2. Fibers, though, accounted for only about 17 percent of DuPont’s business in 1995.