March 10, 2009

ECONOMIC CRISIS FALLOUT

Eastman To Cut Another $100 Million In Costs

Plan calls for up to 300 job cuts and 5% employee salary reductions

Marc Reisch

As the global economy continues to deteriorate, Eastman Chemical plans to whack another $100 million off annual expenses. The new cost-saving effort is in addition to a plan the firm outlined barely three months ago that also aimed to cut expenses by $100 million.

In the latest round, Eastman plans to eliminate up to 300 jobs globally, about 3% of its workforce, within the next four to six weeks. The company is also cutting salaries of non-union U.S. employees by 5% at the end of this month, and it expects to make "equivalent cost reductions" at unionized sites and locations outside the U.S.??

Other actions include reducing non-critical maintenance costs, logistics costs, and discretionary spending. Capital expenditures previously budgeted for this year at $375 million—already more than 40% below the 2008 level—will instead come in between $300 million and $350 million, the firm says.

"The actions we are taking to reduce costs position us to better weather the storm," explains CEO Brian Ferguson. To account for them, the firm plans to take a $30 million before-tax charge against first-quarter earnings.

Back in December Eastman laid out plans to reduce a number of contract and management jobs, freeze salaries, and eliminate overtime. At the time, Ferguson said he believed Eastman was "well positioned to weather this current economic crisis." But now, he says, the "severity of the current economic environment" has forced the company to further reduce costs.

Chemical & Engineering News

ISSN 0009-2347

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