Volume 36, Issue 1, January 2001

FinancialFlash

Solutia Plans to Cut Up to 800 Jobs; Increases Price of Resins

St. Louis-based Solutia Inc. has announced that it plans to cut up to 800 jobs, 25 percent of which will be senior management, as part of a cost reduction plan. The company hopes to save $800 million by doing so as part of the plan, which was incurred by uncertain economic conditions in both the United States and Europe during the past year, leading to an unexpected slowdown in the company’s activity.

“We are moving forward with a smaller group of senior executives, reporting to me, who will have broader and deeper responsibilities, and who have the necessary experience to successfully guide the company to the next phase of profitable growth,” John Hunter chairman and CEO said.

At press time, Solutia expected fourth-quarter earnings of approximately 12 cents per share, despite predictions that the company would earn 17 cents a share. The company’s spokeswoman, Liesl Livingston, said it expects it will take most of 2001 to complete the work force reduction.

In addition, the company has announced a price increase for all grades of Resimene and Maprenal resins, effective December 4, 2000. According to the company, high solids hexamethoxymethyl melamines and urea crosslinkers will increase by 7 cents per pound, a 5 to 6 percent increase. In addition, benzoguanamines, butylated and co-etherified melamines will increase by 6 cents per pound, an increase of 4 to 5 percent. The company said the price increases were caused by rises in raw material prices, energy costs and transportation fuel surcharges associated with the manufacture and shipment of Resimene and Maprenal.

PPG Restructures Financial System
Pittsburgh-based PPG Industries is restructuring its financial system to reduce costs, increase efficiency and accelerate performance improvement throughout the company.

“We see continued declines in a number of our end markets, particularly vehicle production, while natural gas prices continue to rise. It is prudent that PPG respond aggressively, and we have been preparing to implement effective actions for several months,” chairman and chief executive Raymond W. LeBoeuf said.

In other cutbacks, PPG recently said it may spend $50 million to $100 million in 2001’s first quarter on “facility and consolidation” cuts, most of which, PPG says, would be in its paint and coatings business. According to spokesperson John Ruch the cutbacks could include plant closings or layoffs, but definitive decisions have not yet been made.

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