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By Carolyn Koo
NEW YORK (Reuters) - DuPont Co. (NYSE:DD - news), the No. 2 U.S. chemicals
maker, on Monday said it will cut 3,500 jobs, or 6 percent of its work
force, as part of a previously announced plan to reduce costs by $900
million in the face of high raw material prices.
The Wilmington, Delaware, company, catching up with larger rival Dow
Chemical Co. (NYSE:DOW - news) in the cost-cutting department, said
about 70 percent of the job cuts will come in the United States and
Canada and 30 percent overseas, mostly in Western Europe. A spokesman
declined to say which businesses would be hit hardest.
The cuts are in addition to employees affected by DuPont's $4.2 billion
sale of its Invista clothing and carpet fiber business, due to be completed
later this month.
The job cuts and other restructuring steps are expected to result in
a one-time charge of 17 cents to 19 cents per share against second-quarter
earnings, mainly for employee severance costs. The charges will be finalized
during the second quarter, the company said in a statement.
Shares of DuPont were up 65 cents, or 1.5 percent, at $44.08 in morning
trade on the New York Stock Exchange (news - web sites).
DuPont late last year announced plans to cut jobs -- with half the cuts
to be taken this year and the rest next year -- but declined at the
time to disclose details.
Several analysts had complained that DuPont lagged Dow in cost-cutting.
Dow was able to turn around its results last year by eliminating 4,000
jobs, or 8 percent of its work force.
DuPont said that by the end of this year, about 3,000 jobs will be eliminated
through severance programs and about 500 through attrition.
About 450 people who work on a contract basis with the company, predominantly
in operations and manufacturing, will also be cut, with about 80 percent
of those reductions coming in the United States, according to a DuPont
spokesman.
DuPont will employ 55,000 people, excluding employees affected by the
Invista sale, when the job cuts are completed.
The company has said the cost cuts will make it more competitive. Like
other U.S. chemicals makers, it has struggled with high energy and raw
material costs caused by shrinking natural gas production and the war
in Iraq (news - web sites).
The work force reductions will save about $325 million annually and
keep the company on track to cut costs by $900 million in 2005, DuPont
said.
It said it will save about $375 million by reducing spending in areas
such as contract services, supply procurement, telecommunications and
information technology, and will save about $200 million by consolidating
product lines and improving margins.
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