Three of the nation's largest manufacturers announced bad news for employees Tuesday, but Wall Street seemed to take it all in stride as the Dow Jones Industrial Average moved up in early trading.
In Seattle, Aerospace giant Boeing Co. said it will reduce production of four models up to 30 percent because of the continued airline slump worldwide and that thousands of jobs would be affected.In Hartford, Conn., United Technologies Corp. reported a $333 million fourth-quarter loss and said it will eliminate more than 10,500 jobs at its Pratt & Whitney subsidiary.
And in New York, IBM said it will cut its dividend sharply and begin a search to replace chief executive John F. Akers in a sign of the deep troubles at the world's leading computer maker.
- At Boeing, officials said the company will cut production of its 737, 747, 757 and 767 planes.
Company officials said the number of jobs affected by the cuts had not been determined, but job eliminations could reach the thousands as Boeing reduces production by 30 percent.
Boeing said 737 production will decrease from 14 to 10 a month in October 1993, and 747 production will be trimmed from five to three a month in the second quarter of 1994.
The manufacturer said reduction of 757 production from eight and one-half to five a month will be advanced from November to September.
Boeing said 767 production will drop from five to three a month in October. The company had planned to cut monthly production of the 767 from five to four next November.
Dean Thornton, president of Boeing Commercial Airplane Group, said, "There's no escaping that this will mean hardship and job losses, and we'll do everything we can to minimize the impact."
- In a letter to Pratt & Whitney employees, the jet-engine maker's president, Karl J. Krapek, said the division lost about $500 million in 1992 and would have to speed up its previously announced restructuring.
He said Pratt & Whitney now plans to reduce its overall staffing from 40,664 workers at the end of 1992 to no more than 30,000 by the end of 1994. Of the more than 10,000 jobs being cut, he said 6,700 would be in Connecticut and 1,500 in Florida.
"This action is being taken in response to the deepening recession in the aviation industry and strong competitive pressures," Krapek said in the letter. "Our goal is to make ourselves recession-proof."
The fourth-quarter deficit posted by United Technologies translates to a per-share loss of $2.77 and was narrower than the loss of $1.25 billion, or $10.33 per share, during the fourth 1991 quarter.
For the year, United Technologies reported an after-tax loss of $287 million, or $2.67 per share, an improvement over the loss of $1.02 billion, or $10.33 per share, reported in 1991 when the company took restructuring and environmental charges of $1.53 billion.
- On Wall Street, IBM's stock price shot up on the news of the dividend cut. IBM - which had fallen to 17-year lows, losing more than half its value since last summer - was up $2.371/2 at $51.25 on the New York Stock Exchange early Tuesday. It soared above $53 a share immediately after the announcement.
The decision by IBM's board of directors to replace Akers comes against a backdrop of a U.S. corporate record $5 billion in losses in 1992 and a continued failure to rebound despite a series of deep restructurings.
In a bid to save billions of dollars, IBM said it would cut its quarterly dividend by more than half to 54 cents from $1.21. The cut was widely expected.
Akers said in a statement the reduction was made "only after serious deliberation and careful consideration of IBM's earnings and the investments required for the long-term development of our businesses, as well as our intention to pay an appropriate return to investors."
"After weighing all these factors, and taking into account the need to maintain IBM's strong financial position, the board decided to act now in the best long-term interests of the company and its shareholders," Akers said.
The new dividend is payable March 10 to stockholders as of Feb. 10.