September 28, 2001 – Danbury, CT. – Praxair, Inc. is reducing its global work force by about 900 positions in response to weaker economic conditions and an expected slowdown in the aviation industry.
Nonrecurring costs associated with these and other actions are estimated to be in the range of $65 million to $70 million, pre-tax, and will be recorded in third-quarter 2001 results.
“We are disappointed to have to take these actions, but believe they are prudent and appropriate given the current outlook,” said Dennis Reilley, chairman and chief executive officer. “Going forward, this will ensure that we have the lowest cost structure possible and that we have a strong base from which to grow in a weaker economic environment. Our intent is to stay ahead of this situation. If the global economies are stronger than anticipated, all the better. If they are not, we will be ready.”
Praxair’s Surface Technologies subsidiary is a supplier of high-performance coatings and repair services for aircraft engines and parts. As a result of recent events, the company is anticipating a decline in commercial aircraft engine production and servicing, which may be only partially offset by an increase in military orders. The company will downsize its aerospace business accordingly. These actions will result in workforce reductions of about 325 positions and consolidation of service locations. Aerospace market sales represent approximately 4% of Praxair total company sales.
In addition, the company is accelerating implementation of new business strategies for Brazil in response to the power curtailments and currency declines in that country. The company will place greater emphasis on cash flow generation and focus sales growth on less capital-intensive technology and service initiatives. About 125 positions are being eliminated and certain assets written off. Brazil accounts for approximately 10% of Praxair worldwide sales, and its currency has declined by 16% during the third quarter.
In anticipation of slower U.S. economic growth than previously expected, approximately 400 positions will be eliminated, primarily in corporate, procurement and plant engineering and construction groups, with additional reductions in U.S. packaged gases and industrial gases business units. In addition, Praxair is consolidating its industrial gases research and development activities at its Tonawanda, New York, technical center, and is closing its research facility in Tarrytown, New York.
Praxair expects third-quarter earnings per share to be 72 cents, excluding these nonrecurring costs. Fourth-quarter earnings per share are expected to be slightly lower. The company will report third-quarter results on October 24, and expects to provide a more detailed financial outlook at that time.