LP cuts 200 jobs in wake of housing bust
Nashville Business Journal - by Jenny Burns Staff Writer
Louisiana-Pacific Corp. has eliminated about 200 salaried positions, which represents about 14 percent of its salaried workforce.
The company is also reducing marketing and sales expenditures, freezing salaried employee wages and moving its information technology operations into a maintenance mode due to current business conditions.
LP (NYSE:LPX) anticipates a fourth quarter charge of $8 million to 10 million for severance related to the layoffs, CEO Rick Frost says. The stock closed Tuesday at 1.62, down 28 cents (or 14.74 percent) from the previous day's close.
“In addition, we have scrutinized all activities we can cut back or put into hibernation during this housing downturn, and as a result have eliminated our flight operations and research and development facilities,” he says. “These right-sizing actions should reduce the company’s cash usage by about $30 million to $35 million on an annualized basis.”
LP previously announced that it had suspended dividends, indefinitely curtailed operations at four mills and taken significant downtime at other production facilities to manage working capital and preserve cash.
“We have also reduced planned capital spending to $25 million per year for the next several years. This compares to expected 2008 capital spending of $170 million,” Frost says.
LP did not announce its latest cutback measures when reporting its third quarter results on Nov. 4 because the decisions had not been announced internally, the company says.
Frost says LP is working to improve the cash performance of its mills by lowering costs.
“In an environment where timing of a home-building rebound is uncertain and credit markets remain in turmoil, the only prudent course of action is to manage LP for cash,” he says.
LP supplies building products for retail, wholesale, home building and industrial customers.
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