LyondellBasell ups fixed-cost reduction target under $1.3 billion plan

By Caroline Salls

Pittsburgh, April 8 - LyondellBasell has increased its fixed-cost reduction target to $700 million by year-end 2010 as part of a total performance improvement plan of $1.3 billion, according to a company news release.

The company said the improvement plan also encompasses variable and energy cost reductions, as well as revenue enhancement initiatives.

"The original merger plan targeted a fixed-cost reduction of approximately $200 million," LyondellBasell chief operating officer Ed Dineen said in the release.

"Based on our efforts through the second half of 2008 and particularly in the first quarter 2009, we have increased our goal to $700 million.

"More importantly, we believe we will demonstrate a substantial part of this target in the 2009 bottom line, given first-quarter performance."

According to the release, the plan includes a more than 3,000 reduction in employee headcount, or about 17%, and a reduction in contractors approaching 2,000, or nearly 30%.

The plan also includes the closure of 20 offices and research and development sites, as well as the closure of 10 or more manufacturing plants, most of which have been announced or completed.

"The detailed program identifies actions and timelines, and implementation is well under way as momentum built rapidly throughout the first quarter," Dineen said in the release.

"This cost reduction plan is a key part of our effort to offset the current sales volume and margin weakness. It will also be incorporated into the financial projections that will inform our plan of reorganization," LyondellBasell chief financial officer Alan Bigman said in the release.

In addition, Dineen said in the release that "market conditions continue to be extremely challenging, and we are driving hard across all our organizations to enhance our earnings.

"I am confident that we will emerge from Chapter 11 as a stronger, more competitive company."

The U.S. operations and one European holding company of LyondellBasell, a Netherlands-based polymer, petrochemicals and fuels company, filed for bankruptcy on Jan. 6 in the U.S. Bankruptcy Court for the Southern District of New York. The Chapter 11 case number is 09-10023.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.