MeadWestvaco Cutting Expenses, Operations, 2000 Jobs
Jan. 15, 2009 (Press Release) - MeadWestvaco Corp. announced today a series of broad actions that will address the current economic challenges, and also enable the company to capture the highest-value opportunities in targeted global packaging end markets.
These actions include further reducing corporate and business unit overhead expenses, generating $100 million in cost savings in 2009, and closing or restructuring 12-14 manufacturing locations, creating a savings of $25 million, for a total of $125 million in pre-tax savings during the year. This will result in the elimination of approximately 2,000 positions, or 10 percent of MWV’s global workforce, by year end with approximately 800 of the reductions expected to be completed by the end of the first quarter.
In taking these actions, the company is accelerating a longer-term strategic cost management plan begun last year to reduce its overhead cost structure, optimize its manufacturing footprint, and realize sourcing savings throughout its supply chain. The combined effort, including the accelerated actions announced today, is expected to result in run-rate pre-tax savings of $250 - 300 million by mid-2010, in addition to ongoing productivity initiatives. The cost management efforts, which build on the company’s recent commercial alignment improvements, will enable the company both to address current economic challenges and generate long-term profitability.
“We have been taking aggressive steps over the past several months to help ensure we perform in today’s uncertain environment, and are poised to take advantage of the stronger, more stable periods that are sure to come,” said John A. Luke, Jr., chairman and CEO.
“Today’s actions, combined with our strategic focus on the most profitable opportunities in our packaging end markets, will help us further strengthen our financial position and deliver maximum value to shareholders.”
MWV will generate overhead savings through corporate and business staff reductions worldwide, lower discretionary spending, and a decrease in non-manufacturing related expenses. In addition, the company will not provide 2009 pay increases for salaried employees. The manufacturing-related reductions will include savings from facility restructurings and closures, including the previously announced closure of packaging converting operations in Grover, North Carolina; and in Drunen and Uden, The Netherlands. The company has also implemented salaried workforce reductions at its Sidney, New York, Consumer & Office Products facility. In taking these actions, MWV expects to incur principally non-cash pre-tax restructuring and other charges of approximately $200-225 million.
SOURCE: MeadWestvaco Corp.