Hexion Cuts Jobs To Reduce Costs

Hexion Specialty Chemicals said last week that as a result of its program to improve efficiency and cut annual costs by $250 million, it is laying off 20% of its workforce of 6,800 employees.

"Due to the challenging market conditions, we remain vigilant in our cost control efforts," said Craig O. Morrison, Hexion's CEO.

A company spokesman told C&EN that the layoffs began in the fourth quarter of last year and that a majority of dismissals will occur by the end of this year. Many of the layoffs are part of previously announced plant shutdowns like the closure of a bisphenol-A unit earlier in Texas and four plants in its coatings and ink raw materials segment.

The layoffs also include the reduction of shifts and output at other plants. The Hexion spokesman added that the company had originally expected to layoff 15% of its total workforce as part of the program.

The cost savings program has so far netted $71 million in annual savings in 2009, with about $180 million more planned over the next 18 months. Hexion estimates that salary and wage costs have already decreased by 23% during the first six months of the year versus the year-ago period.

Hexion's sales in the second quarter of 2009 declined by 43% versus the same period in 2008, dropping down to $947 million. During the quarter the company generated a loss of $71 million, an improvement from the $181 million loss the company posted a year ago.