The axe fell last week on thousands more Exxon Mobil employeeswho will lose their jobs due to the merger that created the supermajor. The company said it will cut 16,000 jobs, about 15% of itsworkforce, by the end of 2002. Exxon and Mobil predicted job cutsof only 9,000 when they announced their merger a year ago. The $81billion deal was approved Nov. 30.

Along with last week’s announcement of deeper cuts, the companycontinued to tout the benefits of the merger. “When we announcedplans for the merger – about a year ago – both companies recognizedthis was a once in a lifetime opportunity,” said Chairman LeeRaymond. “Since that time, we have further refined theopportunities and benefits available to the merged company.” Thesynergy benefits of the merger are expected to be greater andrealized sooner than previously thought, Raymond said.

Much of the benefit of merging comes from the job cuts. Staffingis expected to decline by almost 16,000 people between year-end1998 and year-end 2002. About 2,000 of that reduction occurred in1999, before completion of the merger. Executive positions willdecrease by more than 1,000, or about one-third of the twocompanies’ pre-merger totals. Staffing numbers do not reflectrequired divestments or any additional productivity improvements inthe base business beyond those already identified.

A year ago, the companies expected pre-tax synergy benefits tobe about $2.8 billion per year by year three of the merger. “Ourcurrent view is that near-term merger synergies will beconsiderably higher than we originally estimated. We expect thesynergies directly attributable to the merger itself to amount to$3.8 billion annually on a pre-tax basis.” Raymond said the mergeris forecast to improve net income by about $1 billion in 2000, withthe positive impact rising to around $2.5 billion by 2003.

Sales proceeds from assets to be divested are estimated to be $4to $5 billion. Raymond said the earnings impact from divestitureswas more difficult to estimate, “but current figures indicate a netgain of around $1 billion after tax.”

Joe Fisher, Houston

©Copyright 1999 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.