Arco Will Fire 1,900 as Part of Restructuring Plan

Atlantic Richfield said Friday that it must fire up to 1,900 employees, even though many more of its employees than expected have opted to take early retirement as part of the Los Angeles-based oil company’s massive restructuring.

Arco would not say where the layoffs will be made, but it is presumed that the company’s substantial California operations will be affected. Arco employs 8,000 people in California, including about 2,000 in its headquarters at 515 S. Flower St. The company employs 39,400 worldwide.

An Arco official declined to say when the firings will occur, but he added that those in Los Angeles who will lose their jobs have been notified.

In a statement, the company said 6,000 of its employees have decided to accept Arco’s lucrative early retirement offer, which is much higher than the 4,000 to 5,000 it had estimated two months ago when it unveiled its restructuring program. Arco said Friday that the mass retirement only meant more people had to go.

“It’s a mix problem,” said Dwaine Smith, senior vice president of employee relations. In some departments, he said, too many managers retired, which means their secretaries and other clerical help are no longer needed. In others, managers are left with too few people to manage.

Smith said the early retirements have come at all levels of employment “from division presidents to secretaries.” He declined to name the retiring executives, saying that some have already changed their minds about retirement and have decided to remain at Arco. “Others may decide to change their minds,” he said.

When completed, the employment cuts will reduce Arco’s work force by up to 20%. “It’s a pretty substantial house-cleaning,” said Todd Bergman, who follows the company for the Goldman Sachs investment firm in New York.

The retirements and layoffs are part of Arco’s two-month-old restructuring, which will reduce the company’s scope and concentrate its gasoline-marketing efforts primarily in the West. The company said it took the action in response to the continuing decline of oil prices and sluggish demand for its chief product, gasoline.

As part of the program, the company has sold most of its money-losing East Coast refining and marketing operations, including a network of 2,000 gas stations. Arco has also completed $1 billion of a $4-billion common stock repurchase program, designed to boost the value of Arco’s shares--presumably to ward off any unfriendly takeover attempt of the company.

Smith said the company’s initial estimate of 4,000 to 5,000 early retirements didn’t include all its East Coast employees. Arco thought those 2,000 workers, most of whom sold or manufactured gasoline, would continue to work for whomever bought Arco’s East Coast business. “We didn’t think all 2,000 would retire, but they did,” Smith said.

Most of Arco’s East Coast gas stations were purchased by Shell Oil and by a newly formed company, Atlantic Petroleum. Atlantic Petroleum, owned by Dutch oil trader John Deuss, also bought Arco’s refinery in Philadelphia.

Expected Savings

Arco declined to say which departments or regions will be most affected by cutbacks. Two months ago, it said it expects to save $115 million a year beginning in 1986 as a result of the employment cuts. It did not say Friday how much more it will save as a result of the newly announced firings.

Industry analysts who follow the company predicted that Arco’s oil production and exploration operations will be sharply reduced. Arco previously said it is slashing its exploration budget by as much as 35% this year. Raymond Urban, an analyst with Duff & Phelps in Chicago, said the cutbacks will probably take place in the lower 48 states, not in Alaska, where Arco owns abundant oil reserves.

Smith said there could be fewer layoffs than expected. Important jobs now filled by those taking early retirement may go to some who otherwise would be laid off, he said. “Right now, we can’t tell how many it will be,” he said.

As a result of the new layoffs, Arco said it is increasing the charge against earnings it will take to cover the costs of the restructuring program to $1.5 billion from $1.3 billion. Arco said the entire $1.5-billion loss would be taken in the second quarter.