Union Carbide Makes Major Expense-Cutting Decisions

Article excerpt

DANBURY, Conn. - Union Carbide Corp. says its expense-cutting plan, including elimination of 4,000 white-collar jobs, is part of a decade -old restructuring move, but analysts say Carbide is reacting to earlier mistakes and that ""the world's gone the wrong way for them.''

Union Carbide Chairman Warren M. Anderson said the seven-step plan announced Wednesday would improve the company's financial position and better its safety and environmental measures.

He said the steps are designed to save about $300 million and substantially improve Union Carbide's return on equity.

They include reducing the white-collar workforce by about 15 percent - 4,000 jobs - taking a substantial charge against 1985 earnings, selling some assets and buying back about 14 percent of its own outstanding stock.

""These are very defensive moves,'' said James M. Arenson, an analyst with Dolandson, Lufkin Jenrette Securities. He said the company had finally realized ""they had made a mistake in expanding (inthe early 1970s). The world's gone the wrong way for them. They should have done this long ago.''

Anderson's management has come under broad criticism for both a slow response over the years to unfavorable economic conditions and for a series of chemical leaks at three company plants.

Since December, chemical leaks at Union Carbide factories have killed more than 2,000 people in Bhopal, India, injured 135 in Institute, W.Va., and fouled water supplies in South Charleston, W.Va.

Most of the staff reductions likely would be accomplished through early retirement, said spokesman Tom Failla. But the company was offering a voluntary severance plan and Failla did not rule out the possibility of layoffs.

As to where the reductions would occur, he said, ""The units have not been identified yet.'' Union Carbide employs 48,400 people in domestic operations and another 46,700 in other countries, he said.

Carbide also planned to generate about $500 million by continuing its sale of ""non-strategic assets.'' The company was not specific, but in the past it has de-emphasized its petrochemical, metals and carbons segments in favor of higher-growth and more profitable consumer products, industrial gases and technology services.

The company said the program will result in a total, non-recurring pre-tax charge against 1985 earnings of $990 million that will reduce after-tax earnings per share by about $8. …