Fairlawn-based A. Schulman Inc. will eliminate approximately 60 positions, mainly from its middle management ranks, the company announced Nov. 14 in a filing with the Securities and Exchange Commission.
The supplier of plastic compounds and resins said the moves are part of Schulman’s restructuring, following some recent losses and the August ouster of its former CEO, Bernard Rzepka.
While Schulman did not put a date on when the cuts will take effect, it did say it expects to realize annual savings of between $5 million and $6 million per year, and to book partial-year savings from the cuts when its fiscal year ends next Aug. 31.
Locally, the effects will be minimal. Schulman spokeswoman Jennifer Beeman said most of the reductions will impact the company’s operations in Europe and that no more than three people at the company’s local operations will be affected by the cuts. Those local employees may also be offered positions with the company, she said.
Schulman also said it “anticipates recording pre-tax restructuring charges of $9 million to $11 million for employee termination benefits and other costs to be paid in cash” as a result of the cuts.
Schulman said it will cut 42 positions from its Europe, Middle East and Africa businesses, another 15 from its U.S. and Canadian business lines, with three more cuts to the ranks working in its Asia-Pacific and Latin American businesses.
Schulman said in its filing that there “will be no position eliminations from the Company’s Engineered Composites segment.”
The announcement comes as the market and other observers wait for Schulman CEO Joe Gingo to announce a new strategic plan for the company.
Gingo, brought back to the CEO position following Rzepka’s departure, has retained advisers with Citi to assist him with what Schulman has said will be a “comprehensive review of its business plan, as well as near- and longer-term global end market trends.”
Schulman has had a challenging year and posted a loss of $350 million for the 12 months ended Aug. 31, when it closed its fiscal year.
That loss was caused by $401.7 million in charges that Schulman took in the first quarter related to its $800 million acquisition of Citadel Plastics in 2015.
Schulman has accused Citadel’s former executive owners and executives of committing fraud by misrepresenting the status of Citadel before the acquisition was made. That matter has yet to be resolved in court.
Its impact, however, resulted in not only the company posting a loss, but in a severe drop in the value of Schulman’s stock, a downgrading of its shares by analysts and the departure of Rzepka.
Gingo has previously said that virtually all options are on the table as he considers how to cut costs and improve earnings at Schulman, including layoffs like those just announced.
By Dan Shingler
Source: Crain’s Cleveland Business
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