Sunoco Cost-Cutting Will Claim Jobs

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Sunoco Cost-Cutting Will Claim Jobs

PHILADELPHIA -- Sunoco, the major oil refiner and c-store operator based here, plans a major cost reduction program that will claim an unspecified number of job losses next year.

In a meeting with analysts earlier this week, new CEO Lynn Elsenhans said the cost-reduction program "actually is not in response to the downturn." The program is designed to improve the company’s costs from the average range to the top quartile, according to the Philadelphia Inquirer.

The CEO, who started in August, said Sunoco must do a better job buying supplies, utilities and services. "This is not cut and cope," she said, citing potential for savings in corporate overhead and in the operation and maintenance of refineries and chemical plants.

Jim Savage, president of United Steelworkers Local 10-1, which represents more than 700 workers at the Philadelphia refinery, said the cost-cutting effort had given people the "McKinsey sweats," referring to the consulting firm Elsenhans hired to assist with the comparison of Sunoco's operations with benchmarks, reported the Inquirer.

Sunoco employs 4,900 people, including 700 in its convenience stores.

Longer term—at least five years out—Elsenhans told analysts Sunoco has big projects on the drawing board for its refineries in the Philadelphia area and Toledo, Ohio, where she envisions a joint venture with a Canadian tar-sands producer.

Sunoco is also continuing its efforts to sell its chemicals business and may convert its Tulsa, Okla., refinery into a terminal.

In response to questions about the incoming Obama administration, Elsenhans said she would not be surprised to a see a higher federal gasoline tax, even though President-elect Barack Obama said he opposed it.

"As I see it, it's not necessarily a bad thing," she said, adding it would encourage conservation and energy efficiency, according to the report.