THE ECONOMIC TRAUMA of the past few months continues with no end in sight as five more chemical companies undertake cost-cutting measures. Most will cut jobs. Three also say they will cut or freeze employee compensation, a tactic firms are using more often now to save cash.
Salary cuts are a prominent feature of a plan by silicones maker Momentive Performance Materials to save $40 million annually. The firm's senior leadership will take a 10% pay cut beginning in April; 2,300 salaried and administrative employees will take a nearly 8% pay cut.
The firm also plans to eliminate 100 positions for a 2% workforce reduction. "Given the realities of the current economic recession, it is imperative that we act to reduce costs," CEO Jonathan Rich says.
Japanese chemical maker Mitsubishi Rayon didn't post job cuts but says that beginning in April, all directors and executive officers will forgo 20 to 50% of their salaries. The firm also will cut salaries and bonuses for managerial staff by 10% because of deteriorating business results.
Paint maker PPG Industries is both cutting jobs and trimming employee compensation to save $140 million annually. As part of a second round of plant closings, PPG will cut 2,500 jobs, almost 6% of its workforce. Cash-conserving measures also under way include "salary and bonus actions," the firm says.
Companies announcing only job cuts include thermoset resins maker Hexion Specialty Chemicals and petrochemical maker Sunoco. Hexion plans to cut more than 1,000 jobs, about 15% of its workforce, over the next 18 months as part of a $100 million productivity improvement program.
Sunoco will reduce its salaried workforce by 750 positions at its Philadelphia and Marcus Hook, Pa., fuel refineries, where the firm also manufactures petrochemicals. Sunoco put its chemicals business up for sale in late December.
Early this year, T. Kevin Swift, chief economist for the American Chemistry Council, an industry trade group, forecast a 3% drop in U.S. chemical employment in 2009.