Tronox cuts jobs/benefits
Thu August 9, 2007
Tronox cuts 20 jobs, slashes retirement
By Adam Wilmoth
Business Writer
Tronox Inc. on Wednesday cut at least 20 Oklahoma City jobs and slashed retiree medical benefits as part of an extended effort to reduce costs. The Oklahoma City-based chemicals company said it will drastically reduce the amount it pays for retiree medical benefits. Retirees currently are responsible for about 33 percent of their insurance costs. As of April 1, 2009, retirees will foot the bill for 75 percent of their medical coverage.
"That date is based on the separation agreement we had with Kerr-McGee, which required Tronox to provide retiree benefits at the same level for a three-year period beginning March 31, 2006,” Tronox spokeswoman Debbie Schramm said.
Tronox also said it eliminated 100 jobs worldwide this week, including 55 positions that were vacant because of a hiring freeze instituted last year. Of the 45 global employees laid off Wednesday, 20 worked in the company's Oklahoma City offices.
The chemicals company said the newest cuts expand its Project Cornerstone cost reduction initiative, which began last year. The initial effort was designed to save the company $60 million annually by the end of 2008. Tronox said it expects to meet that goal and that the most recent announcement expands the cost cuts to $85 million annually by the end of 2009.
"We are very pleased with our Project Cornerstone progress to date, and in response to the challenging short-term environment we are taking further steps under this initiative to improve our competitiveness and financial performance,” Tom Adams, Tronox chairman and chief executive officer, said in a statement Wednesday. "I commend our employees for their commitment to Project Cornerstone. Thanks to their efforts, we are exceeding our targets.”
The announcement continues a trend throughout the country of companies scaling back retirement benefits, said Steve Troutman, a certified public accountant and tax manager for Murrell, Hall, McIntosh & Co. in Oklahoma City.
"Employers are definitely shifting more of the retirement burden to the employee,” he said. "We've had a shift in the last 15 to 20 years more toward 401(k) plans instead of pension plans and other changes that shift the burden from the employer to the employee.”
The good news for Tronox employees, Troutman said, is that they still have access to the company retirement plan. Many firms have stopped providing retirees medical benefits altogether.
"Paying three-quarters of a group rate in most cases is still better than paying 100 percent of an individual insurance plan,” Troutman said.
Even so, it likely will be difficult for many retirees to suddenly assume such a large percentage of the insurance cost, he said. Retirees or workers quickly approaching retirement have few options other than to rely on what they have saved for retirement, he said. But the trend demonstrates the need for younger workers to begin saving for retirement immediately.
"I think they need to realize that most of the onus is going to be on me,” he said. "I can whine and cry about it, but it doesn't change anything. Employees need to take responsibility and contribute as much as they can to 401(k) accounts or IRAs.”
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