The newly created Exxon Mobil Corp. will save $3.8 billion annually by concentrating operations and eliminating 14,000 jobs worldwide--a much deeper downsizing than it had previously announced, Chairman Lee Raymond told industry analysts yesterday.
At a meeting at the New York Stock Exchange, Raymond disclosed the new savings projection, $1 billion more than originally projected, as he and Vice Chairman Lucio Noto shifted from selling regulators on the benefits of the combination to selling investors on the deal. Exxon Mobil shares closed at $83.06 1/4 yesterday, up 68 3/4 cents.
Neither executive clarified how many of the 2,100 former Mobil Corp. headquarters employees in Fairfax will be transferred out of the area or retired, although Exxon Mobil's total employment in Fairfax could grow to 2,400, the company said.
"We will see a lot of to-ing and fro-ing" as divisions are shifted around in the newly blended company, Raymond said. That will include the movement of jobs to Fairfax from Exxon's former research and engineering company headquarters and engineering group in Florham Park, N.J. That group currently employs about 1,000, said spokesman Barry Wood, but he did not say how many would move.
On the 11th day of trading following Exxon's purchase of Mobil, Raymond said the new company is only beginning to fit its disparate pieces together and pursue its combined business plan.
The company's original estimates of $2.8 billion in annual savings and an elimination of 9,000 jobs were "pretty rough and back-of-the-envelope" forecasts, Raymond said. "Now we have a much better understanding of what we can achieve and how we expect to do it" than last December, when the companies announced that Exxon was acquiring Mobil, he said.
By the end of 2002, Exxon Mobil will have almost 16,000 fewer jobs than the companies had separately at the end of 1998, Raymond said. He said Exxon and Mobil acting individually have pared 2,000 jobs in the year the merger has been pending.
Raymond said that 5,000 to 6,000 of the job cuts will be in the United States and that "the majority will come from Exxon," adding later that about 60 percent of the cuts will be Exxon workers. The new company will have an executive force of about 2,000--down by one-third from what the two companies had separately, he said.
Raymond said Exxon Mobil should have about a $1 billion improvement in net income in 2000 because of more efficient operations, rising to around $2.5 billion by 2003, taking into account the impact of one-time restructuring costs and the sale of assets including Exxon service stations in the Northeast and Mobil stations in the Mid-Atlantic. The company is divesting approximately 2 to 3 percent of its total assets, said Raymond, emphasizing that its chemicals business, oil and gas reserves and exploration prospects were left untouched by the divestitures ordered by European and U.S. regulators.
He also emphasized that the new Exxon Mobil has been restructured to be different from either the previous Exxon Corp. or the previous Mobil Corp. It now has 11 functional divisions, organized globally, rather than having the company divided into geographic regions.
Raymond declined to discuss the possibility that the company might buy back some of its shares, noting that Exxon Mobil cannot even discuss the subject for the next six months under accounting rules. He also would not comment on how the company will use its increased capital resources.
Asked to define former Mobil chairman Noto's job, Raymond said it was "to make sure that the Mobil part that goes into Exxon Mobil works for Exxon Mobil, just as I make sure that the Exxon part that goes in works for Exxon Mobil."
Noto, generally viewed by people in the industry as someone who enjoyed running his own show, was more blunt. "It's not a merger of equals," he said. "It was never sold as a merger of equals.
"I work for Lee, and I'm very happy to do that," he said. "There are no ego issues between us. There's no space between us in what we want to get accomplished. So let's just get rid of that. It's a waste of time."
CAPTION: Lee Raymond, right, chairman of the newly Exxon Mobil Corp., and Vice Chairman Lucio Noto expect $3.8 billion in merger savings annually.