NEWS OF THE WEEK
LAYOFFS, RESTRUCTURING: Olin, Pennwalt unveil massive plans Olin and Pennwalt each have disclosed massive restructuring programs that will involve layoffs and result in large third-quarter writeoffs. And, separately, Olin has announced a new president. The two companies thus join a long line of chemical firms that are striving to increase profitability through the closing and divestment of lagging product lines and by cutting employment expenses. The list includes such stalwarts of the industry as Du Pont, Union Carbide, and Monsanto (which is readying yet another restructuring and layoff program in addition to ones it has already put in force). Olin, which traditionally has been below the industry average in profitability, tied as it is to such lackluster commodity chemicals as chlorine, fertilizers, and urethane intermediates, says that its restructuring program is a further step in plans to reposition its assets. This repositioning already has involved a recent divestiture of its Ecusta cigarette paper business and a series of acquisitions in electronic materials and advanced defense technologies. As part of its revamping, Olin plans to sell or liquidate certain businesses that do not meet the company's strategic or performance requirements, a program already begun with Ecusta. Olin also says that it will shut down permanently the chemical facilities that have been placed on standby as a result of "deteriorating market conditions/' It will write off some other facilities and assets "impaired by changed global economic conditions." The sale and shutdown of businesses, Olin says, will result in a workforce reduction of about 3500 employees. In addition, another 700 salaried positions are being eliminated as part of a continuing pro4
October 7, 1985 C&EN
Johnstone: new Olin president gram, begun in 1984, to reduce operating expenses. The 4200 employees thus affected amount to almost 25% of Olin's present 17,000 employee workforce. The restructuring includes an after-tax charge to earnings of $230 million, or $10 per share, thus guaranteeing the company a loss for the year. In the first six months, Olin posted earnings of $25.9 million on sales of about $938 million. Olin says the restructuring program, along with the recent sale of the Ecusta paper operation, will result in a reduction of annual sales of about $420 million. The program also provides for environmental expenses at facilities that are to be discontinued plus the cost of remedial actions at former disposal sites. In addition to the restructuring, Olin revealed that John W. Johnstone Jr. has been elected president of the company. The office of president has been vacant since Ray R. Irani left Olin to become head of
Occidental Petroleum's chemical operations in mid-1983. Irani later was named president and chief operating officer of Occidental Petroleum. The 52-year-old Johnstone came to Olin in 1979 as vice president and general manager of the chemical group's industrial products department. Before that he had been at Airco. At Olin he subsequently became president of the chemicals group, then executive vice president of Olin with responsibility for chemicals, consumer products, and international operations. In a second restructuring program disclosed last week, Pennwalt plans to close by year's end the company's chlor-alkali production facility at Wyandotte, Mich.; write off and dismantle a sodium chlorate facility at Calvert City, Ky.; discontinue production of plastic molding presses by Stokes division; sell its Jelenko division; and dispose of its remaining interests in the S. S. White dental operation. About 1100 of Pennwalt's 9800 employees will be affected. Jelenko produces and sells precious metal alloys and other products used by dental laboratories. S. S. White makes and markets dental equipment and consumable dental products. Those moves will result in thirdquarter write-offs and charges to Pennwalt totaling $62 million, or about $3.00 per share. P e n n w a l t c h a i r m a n Edwin E. Tuttle says the most significant of the moves is the closing of the Wyandotte chlorine and caustic soda plant, which, he says, "has become a serious drain on earnings. The situation at Wyandotte is the result of persistent poor conditions of chlorine and caustic soda in the midwestern market, compounded by the extremely high cost of energy at this location." •
