DUPONT PLANS 2,000 LAYOFFS
Byline: Scott Malone
NEW YORK — The workers at DuPont’s annual meeting last week who asked questions about the future of their jobs evidently had good reason to be concerned.
DuPont Textiles & Interiors on Monday sketched out plans to lay off about 2,000 workers, cutting its overall workforce by about 10 percent. That move is in keeping with the division’s previous warnings that cost-cutting would be a major focus as it prepares for a spinoff from the Wilmington, Del.-based parent company by the end of next year.
That would reduce the group’s overall headcount to about 18,000.
“Downsizing any operation is the toughest task any business leader has to do. These are not nameless ciphers, these are our friends and colleagues over many, many years,” said Richard Goodmanson, executive vice president and chief operating officer of DuPont, who is overseeing DTI’s preparations for the spinoff. “This is the right thing to do, and we are determined to do it right.”
In a conference call with reporters, Goodmanson said the cuts — about two-thirds of which will come in the U.S., with the balance in Europe — reflected the continuing decline of the U.S. textile industry, which is DuPont’s primary fiber customer. He noted that 24,000 industry jobs have been lost since Sept. 11 alone, continuing an ongoing trend of attrition.
DTI plans to shut a plant in Niagara Falls, N.Y., and to reduce its spandex manufacturing at Waynesboro, Va. About half the affected workers will be off the payroll by July 31, with another 20 percent by the end of November, Goodmanson said.
He said no other layoffs were on the drawing board, but declined to rule out the possibility.
“Our stated intent is to remain the most competitive participant in this industry,” DuPont’s number-two executive said. “That means every day and every week we will always look at our cost structure. Are we planning another significant event like this? No.”
DTI officials said the cuts would result in annual savings of $120 million before taxes starting next year. This year, they expect to save about $40 million as a result of the layoffs. The layoffs and plant closings will also result in a one-time charge of 12 to 16 cents a share in DuPont’s second quarter.
According to Thomson Financial/First Call, the Wall Street forecast for DuPont’s second-quarter earnings is 56 cents a share. Last year, the company lost $213 million, or 21 cents a diluted share, in the second quarter.
After the cuts are completed, slightly more than half of DTI’s fiber production capacity will be in the U.S., with less than a quarter in both Europe and Asia, and a small manufacturing footprint in South America.
DTI’s operations, which include all of DuPont’s textile fiber business, previously had been spread around multiple company divisions. DuPont recently provided details on what the divisions results would have been over the past three fiscal years.
In 2001, the division would have reported $70 million in after-tax operating income on sales of $6.48 billion. In 2000, it would have posted $709 million in after-tax operating income on sales of $7.72 billion. In 1999, its after-tax operating income would have been $770 million on $7.79 billion in sales.