Cost-cutting coming this fall in Environmental Technologies
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August 2, 2009
The global recession has affected Corning Inc. in many ways, some obvious and some more subtle.
The clearest example of its impact, however, is in the way the collapse of the auto industry has forced the Twin Tiers' largest employer to slash costs in its Environmental Technologies business.
U.S. car sales have tanked from a peak of about 16 million vehicles in recent years to an anticipated 10 million vehicles this year.
That sharply cuts demand for Corning Inc.'s ceramic devices used in catalytic converters to remove pollutants from vehicle exhaust gases.
As a result, the company is formulating a plan to cut costs in its Environmental Technologies unit by 20 percent.
The announcement of the impending cuts last week wasn't entirely a surprise. Some of Corning Inc.'s markets -- display glass and telecommunications products -- appear to be shaking off the effects of the recession.
That's not the case, the company admitted last week, in both its gasoline- and diesel-engine pollution control products.
"We don't expect the global auto industry and U.S. truck market to rebound quickly," said James B. Flaws, Corning's vice chairman and chief financial officer.
Cutbacks in the Environmental Technologies business would be felt in the Corning area primarily at the company's auto ceramics plants in Erwin, at the Sullivan Park research center and at Corning Inc.'s corporate headquarters.
The Fortune 500 company estimated last week that revenue from Environmental Technologies products will be 20 percent to 30 percent lower than previously expected.
How many jobs will be lost in the Corning area isn't yet clear. Specific numbers aren't expected to be available until September. The goal is to cut the business unit's fixed cost by 20 percent.
The reorganization, Corning Inc. said last week, will include "headcount reductions in Environmental Technologies and supporting corporate technology groups," as well as the elimination of layers of management.
There is, of course, only one solution to the underlying problems of the business -- a global recovery in auto sales that would restore demand for Corning's products.
With no sign that's about to happen, Corning Inc. is moving to shrink the business in order to balance its costs with its depressed revenues.
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