DECATUR, Ill. (AP) — Agribusiness conglomerate Archer Daniels Midland Co. announced plans Wednesday to cut 1,000 mostly salaried jobs as it navigates volatile global crops markets.
The move will cut 15 percent of the Decatur–based company's corporate staff, about 3 percent of its total workforce, CEO Patricia Woertz said in statement.
Archer Daniels Midland reported $2.03 billion in profits for the last fiscal year alone, but crops markets can make for unpredictable revenue. Corn and soybean prices have seesawed violently this year, hitting near–record levels only to plunge again in a matter of months. Such swings can quickly wipe out profits, so ADM is looking to cut as much overhead costs as it can.
Woertz said the job cuts will help the company be more competitive in the modern food industry. It expects to save about $100 million in annual expenses from the cuts, along with other cost–cutting measures. The job cuts will cost between $50 and $75 million during the third quarter of the company's current fiscal year.
ADM said it first will offer employees a chance to voluntarily retire early if they are at least 57 years old and meet other requirements. Employees have until the end of January to take the retirement package. After that, the company will cut the remaining number of jobs needed to meet the 1,000 mark.
ADM employs 30,000 people worldwide with corporate offices in Switzerland, Brazil and China. But news of the reductions could still have a big impact on hometown Decatur.
The company is the largest employer in the city of about 76,000, with about 4,000 workers, and offers some of the highest–paid local positions. City Manager Ryan McCrady said local officials learned of the cuts from media reports, but that after talking with ADM Wednesday, remained hopeful the job losses would be widely spread rather than focused in town.
"I'm optimistic that they're talking about a global reduction, that may buffer some of the impacts at the local level," McCrady said.
Even some ADM employees like Cade Grimm, 35, were caught off guard.
"I hate to see anyone lose their job," the hourly worker from Bethany said upon returning to work from several days off. "This is pretty frightening, actually, because it usually rolls downhill."
Gov. Pat Quinn's office spoke with ADM Wednesday "about doing anything we can to protect Illinois jobs as the company makes its international business decisions," Quinn spokeswoman Marcelyn Love said.
It's unclear how many U.S. employees will be cut until the company knows how many opt to take the voluntary retirement, said spokesman David Weintraub.
Archer Daniels Midland operates everything from shipping barges to ethanol plants and big factories where corn is turned into a rainbow of engineered food ingredients. The company can be both helped and hurt by big swings in crop prices. On the one hand, it can make more money by selling grain overseas. But when corn prices shot up early this summer, it meant Archer Daniels Midland had to pay a lot more for its raw ingredients, which cut the profit margin in its corn processing division.
The reasons behind big price swings for corn and soybeans vary. One of the biggest is the historically low level of grain reserves. The U.S. ethanol industry consumes about 40 percent of the U.S. corn crop, and global livestock producers are consuming more soybeans and corn to feed newly wealthy customers in Asia. Farmers have had a hard time meeting the demand. When reserves get low, global traders get jittery and bid up prices quickly.
A big part of Archer Daniel Midland's business is guessing which way those prices are going to move.
Decatur businesses, most of which are dependent on ADM to some degree, were meanwhile left guessing about the fallout from Wednesday's announcement.
The company helps steady, among other things, the local real estate market even in tough times, said Jeff Hunt, the owner of 12 Stones home inspection service in Decatur.
"When one of the corporates does make a change like that, everybody just kind of holds their breath and waits to see," Hunt said.
Another major firm in Decatur, agricultural processor Tate & Lyle, is moving its headquarters to the Chicago suburbs. The company initially said the move would pull about 160 jobs out of Decatur, but city officials said Wednesday that the figure may be lower.
Leonard reported from St. Louis.