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DuPont cutting 4,000 jobs
April 2, 2001: 1:59 p.m. ET

Chemical maker cites weakness in textiles, apparel; sets 2Q charge
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NEW YORK (CNNfn) - DuPont Co. said Monday it is cutting 4,000 jobs, or about 4 percent of its work force, due to weakness in its key textile and apparel markets.

The chemical maker also said it will cut about 1,300 outside contractors and close certain manufacturing sites.

DuPont (DD: Research, Estimates), which employs a total of 93,000 people worldwide, said it will take a second-quarter charge of about 40 to 45 cents a share for one-time costs from the restructuring, which should yield long-term savings of about $400 million a year before taxes.

graphicHalf of the job cuts will come from the Wilmington, Del.-based company's polyester and nylon fiber businesses. The company plans to shutter older manufacturing operations in the polyester unit and outsource that work to Unifi Corp.

DuPont, which manufactures Lycra, Spandex and polyester, has seen its margins squeezed of late as rising fuel and raw materials costs have increased and demand for its name-brand products has waned in the face of less expensive generic offerings, Credit Suisse First Boston analyst William Young said.

"They've had a strategic setback. Their old growth model seems to have fallen by the wayside because life science has fallen by the wayside. They haven't come up with a great strategy," Young said.

A general slowdown in the manufacturing sector driven by the decelerating economy also added to DuPont's problems, Young said. The latest report from the National Association of Purchasing Management shows that manufacturing is contracting as companies scale back inventory to meet softer demand.

The apparel segment of DuPont's nylon business will continue to focus on upgrading manufacturing processes and diversifying its product mix.

Jobs cuts also will come from the Lycra business in the United States and Europe.

"Taking actions that result in people losing their jobs is the hardest decision we as leaders will ever have to make," DuPont Chairman Charles Holliday Jr. said, adding that "these actions will enable us to more rapidly achieve our goal of sustainable growth."

DuPont beat fourth-quarter expectations in January, but warned then that the "challenging economic condition" experienced in the second half of 2000 would continue through the first half of 2001.

DuPont stock, one of 30 in the Dow Jones industrial average, rose 15 cents to $40.85 in afternoon trading. graphic