Armstrong Cuts More Jobs

Lancaster, PA, February 2, 2006--Armstrong World Industries is eliminating dozens of office jobs at its Columbia Avenue headquarters, outsourcing the work to India, employees say. “You can expect to see continuing change at Armstrong...,” Smith said. The latest round of job losses will shrink Armstrong’s Lancaster County workforce to about 2,000 — a sharp reduction from its 5,000-worker payroll here 15 years ago. Armstrong had warned workers in August that it was weighing several money-saving measures, including outsourcing jobs and adjusting retirement policies. On Jan. 13, Armstrong said it had decided to end pension contributions for younger, newer office workers, opting instead to raise its matching contribution to their 401(k) plans. Employees, who asked not to be identified, said the outsourcing affects jobs in the information technology, shared services and strategic accounts departments, and perhaps other areas. According to employees, 25 jobs in the Armstrong information technology department will be lost this summer. These workers field calls from fellow workers having computer problems. An internal company announcement disclosed that Armstrong had signed an outsourcing agreement with HCL Technologies Ltd. of New Delhi. The strategic accounts department serves major Armstrong customers such as Home Depot and Lowe’s. The shared services department handles payroll, pensions, questions from employees and retirees, and other issues for Armstrong’s domestic operations. It’s not known how much Armstrong expects to save by outsourcing work to subcontractors in India, a move made by many other American firms in recent years. In recent years, Armstrong also has shipped much of the production done at its Lancaster floor plant to overseas plants, albeit plants owned by the company. With the pension change, as well as raising the eligibility for full retirement, Armstrong said it anticipates saving $13 million this year and $15 million next year. While trimming its office and pension expenses, Armstrong won bankruptcy court approval last week of a downsized version of its retention bonus plan. Armstrong will pay up to $3.5 million to 60 managers if they stay at the company through 2006. But that’s just a third of the managers included in the 2005 edition of the plan, a streamlining move taken to lower the plan’s cost. As the New Era reported in December, the 2006 plan calls for managers to get a bonus equal to 20 to 100 percent of their base salary as a reward for sticking with Armstrong for the full year. Among the company’s top five executives, only general counsel John Rigas is included in the plan. He’s eligible for a $382,000 bonus, equal to 100 percent of his base salary, the company said. In a separate bankruptcy court decision, the court also has approved Armstrong’s agreement to sell its Spooky Nook Road warehouse to S-J Realty for $20.2 million. As the New Era also reported in December, Armstrong says it no longer needs the warehouse, as it’s reviving its once-vacant Dillerville Road facility. S-J Realty, of Teaneck, N.J., plans to lease the 594,000-square-foot warehouse. Armstrong, a maker of floors, ceilings and cabinets, has been in bankruptcy since December 2000 to resolve nearly 200,000 asbestos-injury lawsuits pending against it.

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