DuPont plans targeted reductions to improve competitiveness
Responding to weakening business conditions in the U.S. apparel and textile markets, DuPont will accelerate the rationalization of its polyester and nylon fiber businesses to improve financial performance. This will result in a combined polyester and nylon reduction of about 2,000 employees -- or roughly half of the total company employee reductions.
In the company’s Polyester Enterprise, the polyester filaments business unit will accelerate the benefits of its manufacturing alliance with Unifi Corp. by shutting down older filaments manufacturing operations and transferring production to lower cost, more modern and flexible assets. In addition, other polyester manufacturing operations will be streamlined to assure a sustainable competitive cost position.
In the Nylon Enterprise, the apparel segment will continue its previously announced strategy of focusing on differentiated products and modernizing its manufacturing assets. As a result, the company will shut down less competitive production lines.
Other DuPont business units are taking focused actions to improve profitability consistent with their specific revenue, earnings and cash objectives. Internal staff support services will reduce positions commensurate with restructurings across the businesses they support.
Approximately 75% of the affected employees and contractors are in the United States. Projected annual payroll savings, including reduction in contractor costs, are on the order of $400 million pre-tax. DuPont expects to achieve about one-third of the projected cost benefit in 2001, and substantially all in 2002.
DuPont expects to take a one-time second quarter charge of approximately 40-45 cents per share as a result of these actions. Roughly half of this estimated charge will be for employee severance costs, with the remainder principally for asset shutdowns and related dismantlement expenses. Since plans are still being finalized, the actual one-time charge to earnings will not be available until the end of the second quarter.