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Corning announces restructuring programme

Responding to rapidly deteriorating global business conditions across all its major businesses, Corning Incorporated today announced an expanded company-wide restructuring program that will result in …

Responding to rapidly deteriorating global business conditions across all its major businesses, Corning Incorporated today announced an expanded company-wide restructuring program that will result in charges of up to US$ 1 billion in 2001. In addition, the company said that permanent workforce reductions, including those previously announced, may reach 12,000 employees by the end of the year. The company will also temporarily idle the majority of its worldwide optical fibre manufacturing facilities. Corning said that while it has discontinued providing earnings guidance due to the uncertain market conditions, it would not meet the consensus of analyst estimates for the third quarter. “The deterioration of global economic conditions, especially over the past few weeks, has impacted all of Corning“s businesses. In particular, we have experienced another drop in demand for optical fibre and cable as telecommunications carriers continue to curtail capital spending around the world. The telecommunications industry is experiencing an extremely difficult and challenging period,” said John W. Loose, president and chief executive officer. The company said it would idle most of its worldwide optical fibre manufacturing while maintaining limited production at certain facilities for customer responsiveness. These actions are to take effect in late October. Fibre manufacturing operations will resume in 2002 as business conditions improve. Corning Cable Systems will also significantly reduce production at several optical cable manufacturing facilities. This operating plan will allow the company to match production with demand and significantly reduce inventories. James B. Flaws, Corning“s chief financial officer, said, “Our fibre and cable business performed well through August despite the drop-off of demand in the North American long-haul fibre business. In late August, we announced a significant slowing in orders across all fibre product lines from North American and European customers. We“ve recently experienced another decline in worldwide single-mode fibre and cable orders, and, as previously expected, pricing pressures are now increasing.” The company expects its own fibre shipments for the year to be down 10%, reflecting a decline in the worldwide optical fibre market in 2001. Corning has previously announced workforce reductions totalling approximately 8,000 employees, as well as the closing of several Photonic Technologies manufacturing plants. Costs for these programmes were included in the previously disclosed range of US$ 300 to US$ 400 million. Corning now expects to reduce its global workforce by up to 12,000 employees. Corning“s 2001 peak employment was 43,000. As part of this reduction plan, Corning will also offer certain employees in the US a voluntary early retirement programme. In addition to the previously announced plant closings, Corning will close or consolidate several other manufacturing locations as well as smaller businesses in the telecommunications and advanced materials segments.

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