AKRON (Dec. 10, 2008) — A. Schulman Inc. in Akron said it plans further reductions in output and staff as it seeks to align resources with reduced demand in the recession.
The plastics company, whose product line includes thermoplastic elastomers, said the global economic outlook has "significantly worsened" since it implemented prior cost reductions during the fiscal year that ended Aug. 31.
In its North America Engineered Plastics business, which primarily serves the automotive industry, Schulman said it will reduce production capacity by idling two manufacturing lines in addition to permanently shutting down one line at the plant in Bellevue, Ohio. The company also plans to idle one line and reduce shifts from seven days to five days at its plant in Nashville, Tenn.
"These actions will reduce production capacity by 50 percent in this line of business, and total headcount at the two facilities will be reduced by approximately 60, from the current total of 172," A. Schulman said in a statement.
The company also is cutting 15 jobs from its North America Engineered Plastics sales, marketing and technical customer service staff and six full-time workers and three contract employees from its North American administrative staff in Akron.
A. Schulman expects the actions to result in $10 million to $12 million in cost savings, which should be completed by April.
In Europe, which represents about 75 percent of the company's sales, A. Schulman said it's in the process of reducing its current capacity by 7 to 10 percent. The company also has reduced related headcount by 50 full-time employees and 30 contract employees from the total of 1,500 in its European operations, including Asia.
"We are pursuing these restructuring steps at an accelerated pace in response to the continued deterioration in global markets, which has led to weakening sales in both North America and Europe," said Joseph Gingo, the company's chairman, president and CEO.
As a result of what it called the "continued and significant deterioration of the macroeconomic environment," A. Schulman is revising its guidance for the fiscal year ending Aug. 31, 2009. The company now anticipates net income in the range of $30 million to $35 million, excluding unusual items, for fiscal 2009. Last October, A. Schulman said it expected net income would exceed last year's $37.1 million.
"The dramatic and unprecedented economic downturn leads us to conclude that there is too much instability in our markets to maintain our prior guidance," Gingo said.