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Material Costs, Lowe's Breakup Fuel PPG Job Cuts

Tuesday, May 1, 2018

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Global coatings manufacturer PPG (Pittsburgh) said Friday it will be cutting more than 1,000 jobs in a restructuring effort that comes in the wake of rising raw-material costs and the ouster of the company’s consumer brands from a major home-improvement box store.

PPG Place
© iStock.com / jfarleyphoto

PPG (Pittsburgh) will cut about 1,100 jobs over the next year in reaction to rising raw-materials costs and the recent ouster of its Olympic brand from Lowe's home-improvement stores.

The projected layoffs were reported in a filing with the U.S. Securities and Exchange Commission, which notes that a pretax restructuring charge of $80-85 million will be recorded in the company’s second-quarter financial report. Most of that charge will go to employee severance and other cash costs, the filing says. About 1,100 employees will lose their jobs, according to the document.

Consumer Market Changes

The company has not yet indicated where the job cuts will occur, but said in the SEC filing that the move was brought on by “a customer assortment change in our U.S. architectural coatings business” as well as “sustained, elevated raw material inflation.” PPG’s Olympic paints and stains were removed from Lowe’s stores in the first quarter of this year when the home-improvement giant inked an exclusive deal with The Sherwin-Williams Company.

Last week, PPG announced a new deal with Home Depot—Lowe’s primary competitor, and the largest home-improvement retailer in the United States—to sell Olympic products.

Layoff Timeline

The layoffs will occur between now and the second quarter of 2019, according to PPG, and the company expects the restructuring to begin to pay off within two years. The company “continues to review its cost structure to identify additional cost savings opportunities,” according to the SEC filing.

The news comes days after the company’s first-quarter 2018 earnings report, which indicated an increase in net sales over the previous year but noted rising material costs. The quarterly report also admitted a possible accounting error that the company says may have resulted in expenses incorrectly not accrued for the quarter; PPG says it is investigating that matter.

   

Tagged categories: Finance; Layoffs; PPG; Raw materials

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