KINGSPORT — Eastman announced today it will be laying off an undisclosed number of workers and cited the U.S.-China trade dispute as one of the contributing factors for the move.
“We’re operating in a difficult business environment, and we had hoped and expected to see stronger signs of economic recovery by now. Unfortunately, the ongoing U.S.-China trade dispute and the associated economic slowdown in China and Europe have created tremendous uncertainty, which has resulted in reduced demand for our products,” Eastman spokeswoman Betty Payne said in an email. “It has become obvious to us that we must do more to manage our costs as we work through these short-term challenges. Therefore, we have decided to take a balanced approach to cost management on two fronts. After careful consideration, and based on our view of the economy today, we’ve decided to delay employee salary increases where they are not already being implemented except for operator and mechanic roles. We’ve also made the difficult decision to implement a modest and targeted reduction in our workforce.”
Eastman Board Chair and CEO Mark Costa told a regional leaders breakfast last week that the Kingsport-based global specialty chemical company should perform better after the trade war is resolved.
The company passed the $10 billion mark in revenues for the first time ever in 2018.
“We ended the year with a challenging fourth quarter primarily due to reduced demand for specialty products in China as well as the slow flow through of higher raw material costs in an environment of customer destocking beyond normal seasonality,” Costa said in the company’s year-end release. “The end result for the full year was adjusted (earnings per share) growth of 8 percent, within our targeted long-term range of 8-12 percent. Equally important, we delivered free cash flow of approximately $1.1 billion despite slowing economic growth and higher raw material costs. Consistent with our strategy, we made progress in a number of areas, including strong new business revenue growth and continued cost discipline. We remain confident in the resiliency of our portfolio and the sustainability of our strong cash flow going forward.”
Costa predicted challenges from the fourth quarter would linger into 2019’s first quarter, but he noted the company expects adjusted earnings growth for the year to be between 6-10 percent.