US Georgia Gulf plans to lay off 5% of workforce in Q1

17 February 2009 18:23  [Source: ICIS news]

(Adds dropped words "and the closure of the Sarnia polyvinyl chloride (PVC) resin plant, the company said. The cost reduction is expected to help Georgia Gulf better cover its interest and" in paragraph 2)

HOUSTON (ICIS news)--US chemicals producer Georgia Gulf will lay off another 5% of its workforce in the first quarter as part of a plan to reduce operating costs by $47m (€36.7m), company president and CEO Paul Carrico said in a conference call on Tuesday.

The cost-cutting plan includes earlier layoffs from 2008, salary and pension freezes, and the closure of the Sarnia polyvinyl chloride (PVC) resin plant, the company said. The cost reduction is expected to help Georgia Gulf better cover its interest and pay off some of its debt.

The company did not give an estimate as to how much debt it was likely to eliminate.

“We will take the necessary steps to match our operations to market conditions,” Carrico said.

For the fourth quarter, Georgia Gulf reported a net loss of $198.7m in the fourth quarter, with a 31% drop in sales.

Georgia Gulf blamed those falling sales on lower prices and volumes, driven by difficult North American housing and construction market conditions, as well as inventory holding losses in aromatics driven by benzene and propylene price declines.

However, Carrico added that pricing has largely stabilised since the fourth quarter, and said the company doesn’t anticipate another dramatic inventory holding loss after losing $24.8m in the fourth quarter.

“We enter 2009 much leaner, with a much better cost structure and more liquidity than in 2008,” Carrico said.

($1 = €0.78)

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By: Ben DuBose
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