ChevronTexaco to Cut More Jobs Than Expected

ChevronTexaco Corp. on Monday said it will lay off about 500 more workers than management anticipated as part of the newly merged oil giant’s effort to save an additional $600 million annually in its combined operations.

Under the more aggressive cost-cutting program, the San Francisco-based company will eliminate 4,500 jobs, or about 8% of its work force, instead of the 4,000 layoffs envisioned in October 2000 when Chevron announced its plans to buy Texaco for $39 billion.

The extra job cuts are being made as ChevronTexaco raises its estimated cost savings from the merger to $1.8 billion from management’s original estimate of $1.2billion annually. The company expects to trim $1.2 billion in expenses by July 2002 and realize an additional $600 million in savings by March 2003.

The 500 additional layoffs and other belt-tightening measures will account for $80 million of the extra savings, according to a presentation for industry analysts.

More than half--$320 million--of the additional savings will be generated in the company’s “downstream” business, the segment devoted to selling refined products to consumers and businesses. ChevronTexaco plans to reduce its selection of lubricant products, company Chairman David O’Reilly said. ChevronTexaco expects to save an additional $200 million on the production side of its business.

The company says it has identified about 700 specific areas where money can be saved and is holding weekly meetings to make sure the expense cuts are proceeding on schedule.

ChevronTexaco’s shares fell 54cents to close at $82.91 Monday on the New York Stock Exchange. With oil prices sliding, the company’s stock has declined 9% since the Oct. 9 merger.