This Pink Slip’s for You

Recently merged Anheuser-Busch InBev steps up to the layoff bar, with Dow Chemical and 3M joining in on a bad day for employment.
Stephen TaubDecember 8, 2008

Three brand name companies — led by the recently merged Anheuser-Busch InBev — accounted for 8,000 layoffs on Monday as the December totals announced by companies continued to swell.

The Belgian-Brazilian beverage giant said that its U.S. operation will cut about 1,400 salaried positions in its beer-related divisions, affecting about 6 percent of the company’s total U.S. workforce. About 75 percent of the affected positions are based at the brewer’s corporate headquarters in St. Louis while other reductions will occur in field and brewery locations.

In addition, more than 250 U.S. positions that are currently open will not be filled. An additional 415 contractor positions will be eliminated. Most of the reductions will occur by the end of this year, with the remainder taking effect next year.

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Of course, layoffs are hardly unusual after a major merger, even during strong economic times. But the Anheuser-Busch InBev workforce reductions are in addition to the more than 1,000 buyouts of U.S. salaried employees company-wide, who accepted the company’s voluntary retirement offer after the merger closed on Nov. 14. Those retirements were part of planned cost reductions of $1 billion, called project Blue Ocean, announced by Anheuser-Busch in June 2008. At that time, the company announced plans to reduce its company-wide U.S. full-time salaried workforce of 8,600 by 10 to 15 percent before the year-end.

“To keep the business strong and competitive, this is a necessary but difficult move for the company,” said David A. Peacock, president of Anheuser-Busch. It said that it will provide employees with severance pay and pension benefits, among other services.

Dow Chemical Co.’s 5,000 job eliminations were the largest of the day. And the company said it would close 20 facilities in high-cost locations and divest several non-strategic businesses as part of a major restructuring. The job cuts represent a reduction of roughly 11 percent of Dow’s global workforce.

Once fully implemented, these actions are expected to result in $700 million in annual operating cost savings by 2010 and are additional to the previously announced cost synergies of $800 million in the same timeframe for the anticipated Rohm and Haas acquisition. In addition, Dow will temporarily idle about 180 plants and significantly reduce its contractor workforce worldwide by about 6,000.

“Today’s restructuring is designed to support the Dow of Tomorrow,” said Dow chairman and CEO Andrew N. Liveris. “However, we are accelerating the implementation of these measures as the current world economy has deteriorated sharply, and we must adjust ourselves to the severity of this downturn.”

Dow is known for taking aggressive actions to defend its bottom line. Earlier this year when commodity prices surged, it implemented a number of energy-related price surcharges.

3M Co. also confirmed that in the fourth quarter it reduced nearly 1,800 positions across the company, mainly in the developed economies of the U.S., western Europe, and Japan. The actions are expected to provide benefits of $170 million in 2009, it said. The company also said it is “rationalizing” 10 manufacturing, technical and office facilities around the world. “During these difficult economic times, we will continue to aggressively manage our costs,” said president and CEO George Buckley. “We are prepared to implement additional restructuring as economic conditions dictate.”