Spurred by a decline in earnings, Lubrizol Corp. announced yesterday that it will eliminate 150 jobs by the end of this year. The additive supplier said the axe will fall most heavily at its headquarters and technical facilities in Wickliffe, Ohio, but will also touch factories in Deer Park and Bayport, Texas, and a technical center in Hazelwood, England.
The announcement came two weeks after Lubrizol reported a 33-percent decrease in third-quarter earnings. Management said the companys fluid technologies for transportation segment has suffered a drop in sales and that it decided to retrench as it also faces higher expenses for pensions, health care and insurance.
Looking ahead, the timing of a rebound in customer demand is uncertain, Chairman and Chief Executive Officer W.G. Bares said. Therefore we are consolidating positions in order to reduce expenses and to allow us to focus resources on growth opportunities.
The company noted that it has already taken several cost-cutting steps, including restructuring its plant in Bromborough, England, and its joint venture in India, and postponing raises. It also raised prices for fluid technologies for transportation products – primarily additives sold to blenders of automotive lubricants.
Sales in its fluid technologies for industry segment grew 22 percent through the first nine months of the year, but income from the larger transportation segment was off by 8.5 percent. The company said the job cuts – 100 of which will be in Wickliffe – will save $15 million per year, beginning in 2004, although it will incur a one-time charge of $13 million during the fourth quarter of this year.
Taking the restructuring charge into account, management said it now expects full year earnings for 2003 to be between $1.72 to $1.82 per share. Until last month, its guidance called for earnings of $2.20 to $2.30 per share.
ChevronTexaco also announced job cuts Monday that appeared likely to impact its lubricant business. The oil company said it will eliminate 2,000 positions – half of them in the United States – as part of a previously announced plan to reorganize its lubricant and other downstream operations by business type, rather than geography. The company did not specify how many jobs would be cut from its lube business.
Despite those announcements, one observer of the lubricant industry job market said he does not expect a rash of pink slips from other companies.
If anything, I would say things have improved a little bit as the year has progressed, said Ken Pelczarski, president of Pelichem Associates, an employee search firm specializing in lubricant and additive companies. A few companies are now willing to hire for new positions. Of course, the vast majority are still waiting for business to improve and maintaining their positions. But I wouldnt expect to see a lot more cuts.