NEW YORK - Chemicals maker Huntsman said Thursday it will cut 1,175 jobs, close a plant in the United Kingdom and slash capital spending to reduce costs as demand for its products falls amid the recession.
The Woodlands, Tex.-based company also plans to cut 490 full-time contractor positions.
The job cuts, which will involve attrition and layoffs, and represent more than nine per cent of Huntsman's workforce, are expected by the end of 2009 and should save US$150 million per year, the company said.
"This restructuring will allow us to improve our business where we most acutely feel the effects of the present global economic slowdown," president and CEO Peter Huntsman said.
The company plans to record a $60 million charge in the first quarter related to the restructuring.
As consumers curtailed spending in recent months, demand for chemical products has dropped. That has severely cut into margins, offsetting the boost the industry received from falling energy prices.
Elsewhere in the sector, specialty chemicals maker Rohm & Haas said Tuesday it would cut 900 jobs, idle or close some plants and post a $90 million pretax charge to cut costs during the weakening economy.
In December, DuPont and Dow Chemical announced their own layoffs and restructuring plans.
Earlier this month, Canada's largest plastics producer, Nova Chemicals Corp. (TSX:NCX) announced 400 job cuts, including an undisclosed number at its petrochemical plant in the southwestern Ontario city of Sarnia, which employs about 1,000 people.
The cuts represent about 15 per cent of the company's global workforce of 2,800 and are part of an effort to reduce costs by $100 million this year.
Nova, which is headquartered in Pittsburgh but has major operations in Alberta and Sarnia, blamed slumping prices and weakening demand for plastics.
At Huntsman, the company said it will shut down its Grimsby, U.K., titanium dioxide plant as demand for pigments - used in paints and coatings - has waned because of the housing downturn.
The closing of the plant, which the company says is the "oldest and least efficient" in its pigments division, is expected to save $28 million per year.
About 200 full-time employees at the Grimsby plant will lose their jobs when the plant stops production in the first quarter.
Huntsman also plans to reduce capital spending by $190 million to $230 million in 2009 from $420 million in 2008.
The restructuring comes after a nearly 18-month long acquisition fight with Hexion Specialty Chemicals.
Hexion made a US$6.51 billion bid for Huntsman in July 2007. As the economy slid and consumers spent less, Huntsman lost $172.2 million in 2007, compared with a $229.8 million profit in 2006.
Fearing it overpaid for Huntsman, Hexion, which is owned by a private equity firm, tried to break off the deal. Then two banks declined to fund the buyout. After a string of lawsuits and legal maneuvers, Huntsman let Hexion walk away for a $1 billion payout late last year.
The moves announced Thursday should save about $340 million in costs for 2009, Huntsman said.
Shares of Huntsman (NYSE:HUN) fell 12 cents, or four per cent, to US$2.92 in Thursday trading on the New York Stock Exchange. The stock has traded between $2.82 and $25.01 in the last 52 weeks.
Peter Huntsman, president and CEO, said Thursday's stock drop was "surprising" given the cost savings and Hexion payout, which he said puts the company in an "enviable" financial position among its peers.
"The worse of the demand situation, we believe, in our business is behind us in the fourth quarter," Huntsman said in an interview. "Now that we're starting to see raw material costs fall, we're seeing demand pick up across the board."
