PPG Announces Restructuring Plan, Will Eliminate
March 12, 2009
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 million.
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