Tags: Cemex | Jobs | IBM | Costs

Mexico's Cemex Outsources Jobs to IBM to Cut Costs

Monday, 30 Jul 2012 12:38 PM

Mexico's top cement maker Cemex is outsourcing jobs worldwide to IBM in a deal that will help it save $1 billion over 10 years, the latest bid by the company to trim costs and boost its financial health.

Cemex, which was swamped by the 2008 U.S. housing meltdown shortly after paying out some $16 billion to buy Australian peer Rinker, has been working its way out of deep debt obligations for the past three years.

Cemex's Chief Financial Officer Fernando Gonzalez told Reuters the deal with International Business Machines Corp would likely affect "between 1,500 and 2,000" staff, adding that the figure was a preliminary estimate.

Some jobs may be absorbed by IBM, Gonzalez added. Cemex will start passing jobs to IBM from September and the entire transition process should be done by December of next year.

"Starting 2014 is when we will have a full year of savings ... that we hope should be of more than $100 million per year," Gonzalez said, adding that final numbers for the outsourcing plan won't be public until later this year.

By cutting costs and its debt burden, Cemex is getting back on its feet. Two weeks ago, the company posted its highest quarterly operating core profit in nearly three years on a pickup in its U.S. business.

Monterrey-based Cemex employs about 42,000 people worldwide and has operations in over 50 countries.

IBM will provide Cemex with business process and information technology services. It will also include finance and accounting, and human resources back-office services. IBM was not immediately available for comment.

Cemex is in the midst of extending the maturity on a big chunk of its debt - which would help it dodge a $7.25 billion maturity in early 2014 - as it struggles with a stagnant construction market.

Cemex has proposed lenders a debt exchange, selling assets, a pre-payment and revised financial covenants to gain breathing space. The proposal, announced in late June, had been negotiated with half of the company's creditors.

The exchange offer is due on Aug. 20. So far, the company has reported strong participation by lenders.

Gonzalez said Cemex is reviewing operations worldwide to spot those that could be sold entirely but is open to unload minority stakes too. The executive declined comment on which operations were being analyzed.

Cemex shares dropped 2.44 percent to 9.61 pesos in morning trading on Monday.

© 2017 Thomson/Reuters. All rights reserved.

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