Phelps Dodge to Cut 1,650 Jobs In Sweeping Plan to Reduce Costs
Associated Press
June 30, 1999
PHOENIX -- Giant copper producer Phelps Dodge Corp. is cutting back operations and laying off 1,650 workers because of a world-wide slump in copper prices, resulting in a second-quarter restructuring charge of $61 million, or $1.05 a share, against earnings.
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"We are facing the potential of an extended downturn in the price of copper and significant change and uncertainty in key global markets for wire and cable," Douglas C. Yearley, chairman and chief executive officer, said Wednesday.
The company estimates that other restructuring charges, such as the relocation of equipment and personnel, will be $20 million before taxes through the end of 2000. The added charges will be reported as operating expenses in the periods in which they occur.
A First Call survey of 10 analysts expected Phelps to report break even second-quarter results. Last year, Phelps earned $40.4 million, or 69 cents a share, on sales of $794.4 million in the second quarter.
During the third quarter, Phelps Dodge, based in Phoenix, will temporarily close its smelter at Hidalgo, N.M., and the smaller of two concentrators at its Morenci, Ariz., mining complex. The company also will slice production in half at its copper refinery in El Paso, Texas.
Those closures and cutbacks would result in the elimination of approximately 900 jobs, including 250 at Morenci. Another 670 jobs would be eliminated as Phelps Dodge curtails its wire and cable operations.
Last week, Broken Hill Propriety Co. cited slumping copper prices for its decision to shutter its Arizona and Nevada operations, resulting in the elimination of 2,630 jobs.
Copper prices have slid from $1.18 a pound in 1996 to an average of 65 cents this year, partly because of overproduction and partly because of a slowdown in construction demand in Asia from the economic turmoil there.
However, copper futures have been edging higher on the New York Mercantile exchange amid hopes that the global supply glut will finally be easing.
Phelps Dodge High Performance Conductors will close two small facilities in Montville and Fairfield, N.J. ; Phelps Dodge Magnet Wire will close its plant in Hopkinsville, Ky.; and Phelps Dodge International Corp. will cease manufacturing in Educador and will close a small rod mill and magnet wire facility in Venezuela.
Those actions will mean the elimination of 670 jobs.
Columbian Chemicals Co., Phelps Dodge's carbon black and specialty chemicals unit, will suspend operations at its Philippines plant on Dec. 31, eliminating 80 jobs.
The company also has agreed to sell its Witkop mine, its South African flurspar producer, to the South African Land & Exploration Co. Ltd. for total cash proceeds of $12.3 million. The sale is expected to close in early July.
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