Ciba to axe close to 1,000 jobs

Profit goes up but jobs have to go Keystone

Ciba Specialty Chemicals has announced it is cutting 950 jobs over the next two years, with 250-300 disappearing in its home region of Basel.

The Basel area is being particularly hit as the restructuring affects Ciba’s textile division, which is based there.

The cuts will involve an unspecified number of redundancies.

Ciba employs 4,000 people in Switzerland, with about 3,300 staff in Basel.

The country’s biggest trade union, Unia, condemned the job cuts and accused CEO Armin Meyer of bad management.

“Meyer is not doing a good job,” said union representative Mathias Bonert. “Instead of following a strategy, Ciba is carrying out one reorganisation after another.”

In a communiqué on Wednesday, the company said it was making cost reductions in Basel to secure and strengthen its global competitive edge in the textile business.

Optimisation of textile dye production through automation will mean a reduction of 200 jobs, as announced by Ciba in November last year.

Marketing and sales

At the same time, jobs will also be cut in the marketing and sales divisions of the textile business, as well as in support areas.

“With these measures, we are strengthening the international competitiveness of our global textile business in the long term,” commented Meyer.

“The Basel site and Switzerland will be attractive in the long term with automated manufacturing facilities and highly efficient support structures for the production of new, innovative products,” the CEO added.

Meyer said that continuing investment projects of SFr15 million ($12.48 million) in dye production in Basel and SFr18 million in Monthey, canton Valais, underlined Ciba’s commitment to Switzerland.

The 950 cuts are being made as Ciba integrates a paper chemicals unit it bought from Finland’s Raisio Chemicals Group earlier this year, and focuses its Textile Effects unit on Asian growth regions.

Ciba said the job cuts would entail costs of SFr125 million over three years, but would result in yearly savings of SFr90 million.

Paint pigments

The company, which makes products from detergent whiteners to paint pigments, has been cutting jobs, closing sites and reducing net debt in the past two years.

Ciba is also facing higher raw materials costs as the price of crude oil has surged to around $50 a barrel in the past months.

Also on Wednesday, Ciba announced a better than expected third-quarter net profit of SFr132 million, an increase of 22 per cent.

Analysts polled by both Reuters and Bloomberg had predicted net income of SFr83 million.

The company confirmed its 2004 forecast for higher sales in local currencies, a wide margin for earnings before interest, tax, depreciation and amortisation (EBITDA) and improved income in Swiss francs.

Sales in the quarter rose by 13 per cent, including acquisitions, to SFr1.856 billion.

Improving

Ciba said that its end-markets were improving, after saying earlier this year that a recovery was only patchy.

“We still are cautiously optimistic,” Meyer told Reuters in a telephone interview.

“But we have now seen a few months, one after another, where Asia and the Americas are growing, which is a positive thing.”

Meyer said he also expected profitability at the Raisio paper division to improve in the fourth quarter after it had been hit by high raw material prices.

Last year, Ciba recorded a 15 per cent fall in net profit to SFr344 million on sales of SFr6.65 billion.

swissinfo with agencies

Key facts

Ciba Specialty Chemicals became independent in January 1997.
It was created from the specialty chemical operations of the former Ciba-Geigy when that company merged with Sandoz to form Novartis.
Its pigment products make Coke cans and Ferraris red.
Ciba, which has its headquarters in Basel, employs 19,000 people at more than 80 production sites and research centres in 34 countries.

In brief

Ciba Speciality Chemicals is cutting 950 jobs over the next two years, with 250-300 being axed in the Basel area.

The losses are being made under a restructuring programme in the paper division called “Shape”, which was introduced following Ciba’s acquisition of Finland’s Raisio Chemicals.

The programme also aims to adapt Textile Effects structures to changing market conditions.