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Exxon Mobil Plans to Cut Payroll by 16,000 Jobs - New York Times
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Exxon Mobil Plans to Cut Payroll by 16,000 Jobs
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By ROBERT D. HERSHEY JR.
Published: December 16, 1999
The Exxon Mobil Corporation said yesterday that it would cut 16,000 jobs, or about 13 percent of its work force, in an effort to increase its cost savings to $3.8 billion a year by 2002. The figures substantially raise the estimates given a year ago by Exxon and Mobil when they first announced their plan to combine. At that time, the companies said the merged entity would cut 9,000 jobs and save $2.8 billion annually. ''We now have a much better understanding of what we can achieve and how to achieve it,'' Lee Raymond, the chairman, told analysts and reporters at a meeting in New York. ''I am confident that we can achieve at least the $3.8 billion and we can do it faster than we thought.'' That amount, officials said, was separate from savings and margin-improvement actions that the two companies had already undertaken -- amounting to $1.2 billion this year -- or any savings from the divestiture of service stations and refineries that regulators required. Analysts said they were impressed by the company's presentation, which they considered more forthcoming than had been typical of Exxon before the merger. But they said they were not surprised by how much the merger's expected benefits had grown. ''All along, people have been thinking that the ultimate savings would exceed the original estimates,'' said Jay Wilson, an analyst with J. P. Morgan Securities, especially since the company said Dec. 2 that the $2.8 billion forecast was too low. Exxon and Mobil both had track records of ''underpromising and overdelivering,'' Mr. Wilson said. Frank Knuettel, an analyst with PaineWebber, said that Exxon Mobil's $3.8 billion of pretax savings was only slightly more than the $3.6 billion he had been assuming. Exxon and Mobil had a combined work force last year of 123,000. Of the 16,000 jobs Mr. Raymond said would be shed by the end of 2002, some 2,000 came before Nov. 30, when the merger was completed. Of the remaining cuts, 10,000 are to take place next year -- 4,000 in the United States and 6,000 abroad. Exxon Mobil shares rose 68.75 cents, to $83.0625, yesterday in trading on the New York Stock Exchange. Despite its heritage -- Exxon was the successor of the Standard Oil Company (New Jersey) and Mobil was originally the Standard Oil Company of New York -- Exxon Mobil has no significant presence in the New York metropolitan area. Tom Cirigliano, an Exxon Mobil spokesman, said that any job losses in the region would be trivial. In all, 60 percent of the shrinkage is to come from the former Exxon and 40 percent from the former Mobil. Some 10,000 employees are to be discharged while 6,000 are expected to take ''normal or accelerated'' retirements, the company said. Among the expected casualties are about 1,000 executives, or a third of the premerger Exxon and Mobil contingents. ''This is clearly the most difficult aspect of implementing a merger as large as this one,'' Mr. Raymond said of the loss of jobs. ''We have plans in place to help cushion the impact on those who must separate.'' To win regulatory approval of the merger, the company agreed to sell 2,431 gas stations, a California refinery and various marketing and refining stakes in Europe. Proceeds from these sales are expected to be $4 billion to $5 billion, Mr. Raymond said. The merger, he added, should generate a one-time net addition of $3.5 billion to cash flow. The company also said yesterday that it planned to raise production by 4 percent next year, twice what Mr. Knuettel, the PaineWebber analyst, said he had expected. The session generally appeared to reinforce many analysts' perception of ExxonMobil as a blockbuster company. ''What hit home with a lot of investors there was the incredible position this company is in now,'' said Mr. Wilson of J. P. Morgan. ''Both functionally and geographically, it is really awesome.''
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