PET maker Wellman Inc. is enacting major cost-cutting measures that will save the company between $20 million and $25 million annually.
In a Nov. 4 news release, Shrewsbury-based Wellman announced the resignation of Clifford Christenson, president and chief operating officer. Christenson will not be replaced, and three other senior-level positions will be eliminated.
Wellman also postponed until 2006 the modification of an idle polyester fiber line in Bienville, Miss. That line was to be changed to a swing line that could make either PET resin or polyester fiber.
In fibers and recycled products, Wellman will reduce costs related to developing and selling products that require new technology. Instead, the firm will focus on commercialization of products developed in the past two years.
Wellman Chairman and Chief Executive Officer Tom Duff said the cuts are designed to ``improve profitability, reduce debt and enhance stockholder value.''
Christenson joined Wellman in 1985 as chief financial officer and treasurer and was named president in 1999. According to Securities and Exchange Commission filings, Christenson was Wellman's second-highest-paid employee in 2002 with total compensation of almost $800,000. He trailed only Duff, whose compensation was almost $1.3 million.
Two of the other positions being eliminated were held by Donald Cartwright and Ernest Taylor, according to Wellman's 2002 annual report. Wellman officials declined to say if either of them were still with the company.
The final position being eliminated was held by Joseph Tucker, who now will serve as vice president of the firm's fibers and recycled products group. John Hobson, who formerly held that position, has been named to the new position of vice president of Wellman Europe. Hobson was Wellman's third-highest paid employee in 2002, while Tucker came in fifth. Officials declined to comment on whether Hobson's and Tucker's compensation would be affected by the moves.
Wellman spokesman Dennis Sabourin said no production sites would be closed as part of the cost cutting. The Nov. 4 release also included official comments that ``other administrative consolidations are under way'' at Wellman and that the firm ``is also undertaking a variety of actions to lower overall manufacturing costs.'' Sabourin declined to elaborate on these statements.
In the first nine months of 2003, Wellman's sales were up almost 9 percent to $833.4 million vs. the same period in 2002. The firm posted a profit of $1.5 million in that period in 2003 after losing almost $198 million in the year-ago period, primarily because of an accounting change.
In an Oct. 22 earnings release, Duff said the loss of almost $5 million that Wellman reported for the third quarter was the result of ``increases in raw material costs and extremely competitive conditions in the NAFTA PET resins market.''
``These market conditions resulted from recent PET capacity increases ... combined with an unexpected drop in demand ... related to the poor weather in the eastern United States,'' Duff said.
Wellman is one of the world's largest PET recyclers and ranks fourth in North American PET capacity with a market share of about 15 percent.
On Wall Street, Wellman's per-share stock price was around $8.50 in late trading Nov. 5. It started the year near the $12.50 mark and was at $11 as recently as July.