Merger fallout reaps jobs at BP Amoco
15 Jan 2000
BP Amoco expects to gain $2bn per year in cost savings from its now-completed merger - but it will be shedding 10,000 employees, not including any that are transferred as a result of divestments. Some 3000 of these redundancies will be in chemicals.
The cost-cutting measures are expected to be in place by the end of next year - half of the time originally expected when the merger was finalised. Around 7000 employees have already been handed redundancy notices. Capital spending plans have been slashed by more than $3billion, with the axe falling mainly on exploration and production projects.
Other changes to the original plans include the siting of BP Amoco Chemicals headquarters at Britannic House in London, rather than at Amoco's HQ in Chicago. Bryan Sanderson will serve as chemical chief executive. The senior Amoco chemicals executives, Enrique Sosa (president) and Bill Lowrie (deputy chief executive) have both left the company, Sosa to `pursue family and other business and charitable interests'.
BP Amoco Chemicals' profits plummeted 28 per cent in 1998, to £687million, with pressure on margins for all of its products. The fourth quarter was the worst three-month period the company had seen for the past five years, Sanderson commented.
Return on sales was well below the 10 per cent target the company is striving to reach at the bottom of the business cycle. The company is currently embroiled in a strategic review of its interests post-merger; this is expected to be complete by July.
