PPG Announces Restructuring Plan, Will Eliminate 2,500
PPG Industries announced today that it will implement another business restructuring plan focused on reducing its global cost structure. The plan will include the elimination of 2,500 jobs.
The company cites global economic conditions, low end-market demand and acceleration of cost-savings from the integration of the SigmaKalon businesses acquired in 2008 as reasons for the program.
Company officials say they expect the restructuring plan to deliver pretax cost savings of approximately $60 million in 2009, growing to an annual run rate of about $140 million thereafter.
Implementation of the plan is expected to cost the company approximately $160 million in cash, with a pretax charge of approximately $190 million, or 88 cents per share, to be recorded in the company's first-quarter 2009 financial results.
PPG will be closing a paint manufacturing plant in Saultain, France, along with several smaller production, laboratory, warehouse and distribution facilities across the company's businesses.
"These are sweeping steps that will impact all of PPG's business segments and regions," says Charles E. Bunch, PPG chairman and chief executive officer. "We are making significant structural changes to the way we operate our businesses. By implementing this program, we not only will be better able to weather today's difficult conditions, we also will be a more efficient company coming out of the current economic downturn."
Bunch says that the largest portion of the cost-reduction activity will take place in the company's automotive OEM coatings and industrial coatings business units.
"We are managing the company decisively through the current global economic downturn," Bunch said, "with a focus on lowering our cost structure and retaining our strong liquidity position."
In addition to its restructuring actions, PPG stated that it has implemented
a wide range of cost-reducing and cash-conserving measures, including
employee furloughs, salary and bonus actions, and elimination of the company
match of employee contributions to 401(k) plans. Capital spending, excluding
acquisitions, is being reduced by about 50 percent from the $383 million
spent in 2008. Also, based on updated information, PPG estimates that
its 2009 pension contributions will be reduced from the $400 million to
$500 million expected at the beginning of the year to approximately $350
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