Plastics compounder A. Schulman Inc. of Fairlawn, Ohio, is laying off 28 workers and cutting back to a five-day work week at its Orange, Texas, plant in a move partially blamed on weakening sales in the automotive market.
The layoff, effective July 13, affects 25 hourly employees and three salaried workers.
Schulman's second quarter sales were down slightly from the same period in 1997, but net profit was up 5 cents per share.
Terry Haines, Schulman president and chief executive officer, had warned in April that a softening automotive market, combined with higher costs, would make it difficult for the firm to achieve profit objectives in 1998.
At the same time, Haines expected that competitive price pressures would make it difficult for Schulman to generate additional margin improvement in the second half of the year.
Haines said July 2 by telephone that an overall slowdown in automotive sales directly hit the Orange site, since more than half of the plant's ionomer, urethane and polypropylene-based compounds are sold into that market, mainly in exterior applications.
``Automotive isn't having a banner year,'' Haines said. ``It's been worsened by the GM strike, but [the strike] wasn't really a reason for this decision.''
Haines added Schulman management will evaluate the situation before deciding if the layoffs are temporary or permanent. After the layoffs, the Orange plant will have about 110 employees.
Haines described the Orange plant as ``a good-sized operation'' with three compounding lines.
``[The layoffs] are difficult to do, but it's something we have to take a look at,'' he said.
Earlier this year, Schulman cut 15 workers when it closed three older lines at its Akron, Ohio, plant.
Schulman, an international compounder with more than 60 percent of its sales in Europe, posted sales of almost $1 billion in the 1997 fiscal year. About 70 percent of the company's products are polyethylene-based or PP-based compounds.