From Plastics & Rubber Weekly
LyondellBasell is set to slice $700 million from its fixed costs by the end of 2010. The move will see the loss of 3 000 jobs, around 17 percent of its workers. The new target is part of a performance improvement plan of $1300 million, which also encompasses variable and energy cost reductions, as well as revenue enhancement initiatives.
"The original merger plan targeted a fixed-cost reduction of approximately $200 million. Based on our efforts through the second half of 2008 and particularly in the first quarter 2009, we have increased our goal to $700m," said Ed Dineen, LyondellBasell's chief operating officer.
"More importantly, we believe we will demonstrate a substantial part of this target in the 2009 bottom line, given first-quarter performance."
The plan includes a staff reduction of more than 3000 and a reduction in contractors approaching 2000, or nearly 30 percent. It includes the closure of 20 offices and research and development sites and the closure of 10 or more manufacturing plants, most of which have been announced or completed.
"The detailed programme identifies actions and timelines, and implementation is well under way as momentum built rapidly throughout the first quarter," said Dineen.
"This cost reduction plan is a key part of our effort to offset the current sales volume and margin weakness. It will also be incorporated into the financial projections that will inform our plan of reorganisation," added Alan Bigman, LyondellBasell's chief financial officer. "We are working toward confirmation of a plan consistent with the milestone schedule set forth in our debtor-in-possession loans."
"Market conditions continue to be extremely challenging, and we are driving hard across all our organizations to enhance our earnings," said Dineen. "We are pleased with our progress, but are committed to doing more and doing it more quickly.
"I am confident that we will emerge from Chapter 11 as a stronger, more competitive company that will continue to be a leader in innovation, customer satisfaction and the manufacturing and development of products that improve quality of life for people around the world."
LyondellBasell is a major producer of polymers, petrochemicals andfuels, with a leading position in propylene oxide and its derivatives,used to make polyols for polyurethanes.