Union Camp to Wipe Out 540 Jobs; Will Save $42 Million Annually
Union Camp Corp., Wayne, NJ, has announced a series of reorganization and restructuring actions to improve profitability. The initiatives announced yesterday will result in the elimination of approximately 540 positions, beginning in the fourth quarter of this year. This program will be substantially implemented by the end of next year. When completed, these moves are projected to reduce the company's annual costs by about $42 million. The jobs being eliminated are predominantly administrative and support positions.
These actions are in addition to the company's Profit Enhancement Program, which was announced at the end of 1996 and will soon be concluded. Consequently, no loss of sales revenue is expected. Included in these actions are: a reorganization and restructuring of research and development activities to significantly lower costs; reorganization of the company's Packaging Group administrative functions to consolidate staff resources; additional streamlining in its papermaking, distribution, forest resources and chemical products businesses; and the sale of certain non-essential assets.
In addition, Union Camp's board of directors has increased the company's authorized level of share repurchases. The company will take a special, non-recurring pre-tax charge in the third quarter of approximately $49 million to reflect costs related to these new initiatives and for asset write-downs. The charge will reduce after-tax net income by about $31 million, or 45 cents per share.
The announcement includes changes in the company's research programs, a substantial portion of which have previously been conducted on a centralized basis at a corporate laboratory located in Princeton, NJ. The company will close the Princeton facility this year and, in the future, product and process development activity will be carried out in a more decentralized and highly focused way within each of the businesses. Some of the 187 employees at the Princeton laboratory will be offered transfers elsewhere in Union Camp; most of the positions, however, will be eliminated. Jerry H. Ballengee, president and COO of Union Camp, said that although technology continues to play an important role at the company, "it is no longer appropriate to maintain a large, centralized R&D function."
Packaging Group Reorganization
Union Camp's Packaging Group consists of five operating divisions, employs about 9,000 people and represents approximately 40% of total company sales. Linerboard, kraft paper and saturating kraft are produced at two world-class mills. Products from 50 converting plants throughout the United States and at several overseas locations include corrugated containers, point-of-purchase displays, industrial and consumer flexible packaging and folding cartons.
To gain efficiencies, the company will be shifting to a "shared services" approach to many administrative support functions, such as accounting and human resources, within each of the five divisions of the Packaging Group, an initiative made possible largely because of investments made in information technology and process-redesign programs. It is estimated that approximately 190 positions will no longer be needed when the reorganization is completed over the next 12 to 18 months.
Share Repurchase Program
The company's board of directors increased by five million shares the amount of common stock that the company is authorized to repurchase. Prior to yesterday's increased authorization, the existing repurchase program had about 1.2 million shares remaining to be purchased. With yesterday's action, the shares authorized for repurchase increase to approximately 6.2 million. The company plans to continue its practice of purchasing shares from time to time in the open market. At present, Union Camp has about 69 million shares outstanding.