UPDATE: Sunoco To Cut 20% Of Salaried Workers In Pa.
13 Marzo 2009 - 6:00PM
Dow Jones News
Sunoco Inc. (SUN) announced Friday that it will cut 750 jobs,
20% of the salaried work force, at its Philadelphia headquarters
and two area refineries in an attempt to better perform during
downturns in oil refining.
Oil refiners' profits have been squeezed by the economic
downturn because demand for gasoline, diesel and jet fuel has
weakened. Other refiners have focused on shoring up cash reserves
or improving operations. Sunoco is the first refiner to announce
widespread layoffs.
Layoffs at auto manufacturers, banks, technology companies and
other major employers have driven U.S. unemployment rates, which
rose to 8.1% in February.
Sunoco, the second-largest U.S. independent refiner, said its
cuts are part of the first phase of the company's restructuring
plan. Although the cuts apply only to salaried workers, the company
will give some hourly employees the opportunity to resign with
severance packages. Sunoco recently entered into a three-year
contract with the unions representing these hourly employees.
A second phase of the project will review Sunoco's refineries in
New Jersey, Oklahoma and Ohio, and its coke and chemicals
businesses. Analysts say that review could take an additional six
months.
"Like many other companies across a variety of industries,
Sunoco is taking steps to remain competitive," said Chief Executive
Lynn Elsenhans.
The layoffs, coupled with reduced energy use and cutbacks on
materials will allow Sunoco to cut its costs for 2009 by $300
million, the company said. The cuts account for about 11% of
Sunoco's total operating expenses, according to an estimate from
analyst Chi Chow of Tristone Capital Co.
Sunoco's spending is currently in line with the industry
average, and the cutbacks will enable Sunoco to perform at
first-quartile levels, said spokesman Thomas Golembeski.
"We view the reduced cost structure as a precursor to a
downsized asset base in the future," said Chow, of Tristone.
Since Elsenhans arrived at Sunoco in August, she has announced
plans to sell its chemicals business, mothball a chemical plant and
shutter its Tulsa, Okla., refinery, in the absence of a buyer.
Under Elsenhans, the company retained consultancy McKinsey &
Co. to evaluate its operations in conjunction with an internal
review.
Sunoco shares fell 6.6% to $27.18 in recent trading Friday. The
stock is down one-third this year.
-By Jessica Resnick-Ault, Dow Jones Newswires; 201-938-4435;
jessica.resnick-ault@dowjones.com
(Kevin Kingsbury in New York contributed to this report.)
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