DuPont Textiles & Interiors (DTI) today announced plans to reduce the workforce by more than 2,000 employees, and officials said 200 of those would be at the Chattanooga facility.
Ben Melnyczuk, local plant manager, said workers are being offered generous severance packages and it is hoped the 200 job reduction can be carried out voluntarily.
Employees at the Chattanooga facility were given the news on Monday morning.
The local plant, which at one time had over 5,000 workers, was down to 1,100 prior to the announcement. It also has 150-200 contract workers and 325 others on site in a joint venture.
Employees are being offered one month's pay for every two years of service. The minimum benefit is equal to two months' pay. The maximum benefit is 12 months' pay. Workers are also offered up to $5,000 in tuition assistance to learn new job market skills and continuation of health, dental and group life insurance at employee rates for a year.
Mr. Melnyczuk said the U.S. textile industry has been facing difficult times, and he expects it will continue to do so. "This business is not getting any easier."
He said the textile industry increasingly is moving overseas where labor rates are much cheaper.
He said the local plant's research and development department would be scaled back and that other cuts would come throughout the operation.
DuPont officials said the moves "will advance our progress toward becoming a more competitive integrated enterprise."
The move involves a reduction of more than 10 percent of the DTI global workforce. More than two-thirds of the reductions are in manufacturing facilities and offices in the United States, with most of the balance in Europe.
In the U.S., DTI plans to shut down its Terathane® PTMEG manufacturing unit at Niagara Falls, N.Y., and less competitive portions of the spandex operation at Waynesboro, Va.
"These are difficult but necessary actions to position DTI for success in a highly competitive and rapidly consolidating industry," said Richard R. Goodmanson, DuPont executive vice president and chief operating officer, who is leading DTI. "We must act quickly and decisively to match our resources with current market realities. We are committed to doing what it takes to capture market opportunities while serving our customers with speed and flexibility."
"We do not anticipate a negative impact to our revenue streams as a result of these restructuring actions," Goodmanson added. "We will support our current revenue base from more competitive facilities. We are primed to grow revenues by capitalizing on our strong global market access, key branded platforms and a robust innovation pipeline targeting the global apparel, interior and textile markets."
DuPont expects to achieve annual pre-tax cost savings of about $120 million as a result of these actions, realizing about 30% in 2002 and substantially all in 2003. The company expects to take a one-time second quarter charge of 12-16 cents per share, with about two-thirds due to employee separation costs, and the balance for asset shutdowns. Since plans are still being finalized, the actual one-time charge to earnings will not be available until the end of the second quarter.
DuPont announced in February that it planned to create DTI as a new wholly owned subsidiary and separate it from DuPont by year-end 2003, market conditions permitting. The company is evaluating a range of separation options, including an Initial Public Offering. DTI includes the nylon fibers, polyester fibers, Lycra® brand fiber and spandex businesses, plus their intermediates and joint ventures.
"We recognize that this is a difficult time for all employees," Goodmanson said. "We appreciate the contributions of our employees who will be leaving and we will treat everyone – whether they are leaving or staying – with dignity and respect."
Current plans call for more than half of the affected employees to leave DuPont by July 31. They can take advantage of transition packages available in their country or region. For example, U.S. employees leaving DuPont will receive a severance package providing them with career transition payments based on length of service, as well as a range of health and dental benefits and educational assistance.
DuPont officials noted that 116 U.S. textile plants with 67,000 jobs had closed prior to last Sept. 11. They said following that date, four "icons" of the textile industry filed bankruptcy, affecting another 24,000 jobs.
DuPont Textiles & Interiors is the largest integrated textile fiber and interiors business in the world, with approximate annual revenue of $6.5 billion and operating in 50 countries. Headquartered in Wilmington, Del., DTI is comprised of two units, each with subgroups: Textiles and Interiors including apparel, home, industrial and flooring; and Intermediates including nylon, Terathane® PTMEG and polyester intermediates, specialties and joint ventures. DuPont Textiles & Interiors has a powerful portfolio of the best-known, worldwide brands and trademarks of DuPont including: Lycra®, Stainmaster®, Coolmax®, Thermolite®, Supplex®, Antron®, Cordura®, Tactel®, Dacron® and Micromattique™.