10% cut in employees but marginal impact on productivity

17 October 2002 08:37  [Source: ICIS news]

Chemical company chief executive officers are concerned about the long-term impact of the shrinking availability of chemical engineering and chemistry graduates and the ability of their companies to attract the best and brightest brains across many disciplines.

Yet when it comes to the day to day running of their companies, in the current environment they have to make cuts hard and fast. The number of people employed in the sector continues to fall – very steeply at some firms. Companies are having to learn to do a lot more with a lot less.

The top 50 companies cut employee numbers by more than 10% last year and the cuts this year have continued thick and fast. Indeed, there is little indication that companies will feel able to expand anytime soon. There are numerous reasons for this. The impact of IT (information technology) on chemicals is of long-term significance, certainly. Also, structural change is leading to plant closures. But companies are losing most employees at management level as they take steps, organisationally, to become much flatter and, potentially, nimbler.

Chemical companies are losing a great many older and experienced individuals but the chief executives I have questioned on the matter recently don’t feel that the loss of experience will have a net negative influence on performance. There is a strong belief in replacing old talent with new and of being able to manage effectively with better and smarter IT systems in place.

My tables gives some idea of the cutbacks across the industry in 2001 and also show employee productivity (sales per employee) numbers for the year. The average cutback in employee numbers in the company's sampled in the Reed Chemical Group’s top performers analysis for 2001 was over 5%. The 50 companies that cut the most are shown here, the average cutback being 12%. The cutbacks were not confined to any particular sector or region. As the data show, companies across the industry have been making cuts.

The sales per employee figures are telling. It is not surprising that some of the companies linked to oil producers feature strongly in the rankings. Japan’s producers too would be expected to have relatively high sales per employee numbers because of their corporate structures and the number of employees reported in the accounts. However, the table is dominated by companies from North America (27 out of 50) a fact which is linked directly in many instances to the cutbacks in employee numbers in recent years and the focus on employee productivity. Some firms were hit hard by much lower sales last year but most fought back by keeping a tight rein on employee numbers and costs.

The data cannot show it but anecdotal evidence points to much more of the same in 2003. Companies continue to cut costs and make layoffs. The lower employee numbers will probably lead to better employee productivity ratios. In one respect at least, they will have served their purpose.

Employee numbers – where the cuts fell

Company

Employee

Change

Company

Employee

Change

Numbers

Numbers

FMC

6000

-59.5%

Rohm and Haas

18210

-10.1%

IMC Global

5194

-33.7%

Mississippi Chemical

1365

-9.8%

ChemFirst

489

-32.4%

Elementis

2682

-9.7%

Rutgers

11112

-26.0%

Showa Denko

11970

-9.4%

Hercules

9665

-18.9%

IFF

3394

-9.3%

Arch Chemicals

2950

-16.7%

British Vita

13933

-9.2%

Honeywell

12500

-16.7%

Solvay

29416

-8.9%

Croda

2010

-15.3%

Rhodia

26925

-8.7%

Degussa

53378

-15.2%

Syngenta

22791

-8.5%

Shin-Etsu

16456

-15.2%

Clariant

17414

-8.4%

DuPont

79000

-15.1%

MG Technologies

14419

-7.6%

Occidental Chemical

4555

-14.9%

Georgia Gulf

1232

-7.3%

Avecia

38600

-14.5%

Cytec

4450

-7.3%

ICI

38600

-14.5%

Dainippon Ink & Chems

28399

-6.4%

Yule Catto

3619

-13.6%

Potash Corp of Sask

4997

-6.4%

Noveon

2790

-13.4%

H B Fuller

4891

-5.6%

Huntsman

13000

-13.3%

Linde

17689

-5.2%

Olin

5900

-11.9%

EVC

3213

-5.2%

Norsk Hydro

11555

-11.9%

Cabot

4300

-4.4%

Crompton

7340

-11.6%

Bayer

116900

-4.3%

Millennium Chemicals

3875

-11.3%

Wellman

2500

-3.8%

PolyOne

8000

-11.1%

Ciba Specialty Chemicals

11832

-3.3%

Celanese

11800

-10.6%

Akzo Nobel

66300

-3.1%

BASF

92545

-10.4%

AECI

8164

-2.9%

Solutia

9170

-10.1%

Wacker-Chemie

17058

-2.9%


 

Chemical industry employee productivity 2001

Company

Sales/

Change

Company

Sales/

Change

Employee ($)

Employee ($)

Lyondell

2330606

na

Mississippi Chemical

395897

23.5%

Georgia Gulf

978815

-17.8%

Cabot

394884

12.9%

Terra Industries

827404

0.5%

Ineos

394225

-

Sterling Chemicals

805634

-32.2%

Celanese

384478

-

Nova Chemicals

694348

-16.7%

Noveon

381147

5.1%

Occidental Chemical

678814

na

IMC Global

377108

40.9%

ChemFirst

633947

19.4%

Ciba Spec Chemicals

375140

-

Borealis

623087

na

Formosa Plastics

372243

-

Huntsman

615385

8.6%

Crompton & Knowles

370436

1.3%

Mitsui Toatsu Chemical

558954

na

Shin-Etsu

354945

-

IFF

543253

38.9%

EMC

352766

-

Sabic

535634

-

Mitsubishi Chemical

347420

-

Dow Chemical

527609

-4.8%

Tosoh

342562

-

Norsk Hydro

516648

na

Clariant

341510

-

Polimeri Europa

512389

na

Eastman

340759

-

Borden Chemical

490036

-

NL Industries

334040

-9.5%

Potash Corp of Sask

477687

0.3%

PolyOne

331825

58.2%

Stepan

475297

-5.7%

FMC

323833

133.8%

LG Chemical

458936

-

DSM

322459

-

OM Group

454395

-20.5%

Air Products

321191

2.8%

Showa Denko

451946

-

DuPont

321139

2.3%

Sumitomo Chemical

441243

-

BASF

312586

-

Wellman

432520

0.7%

Arch Chemicals

312136

17.4%

Millennium Chemicals

410323

0.0%

Cytec

311708

0.2%

Lubrizol

407196

0.7%

Dynea International

311416

-




By: Nigel Davis
+44 20 8652 3214



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