Ecolab Announces Restructuring Plan

Ecolab Inc. plans to undertake restructuring and other cost-saving actions as it streamlines and improves its global business. These anticipated actions will result in a Special Charge in the fourth quarter of 2008 as well as a restructuring Special Charge in 2009, and will produce significant annual cost savings as well as a more efficient organization.

“The restructuring steps we’re taking are designed to better position the company for today’s economic conditions and the future,” said Douglas M. Baker, Jr., Ecolab’s chairman, president and chief executive officer. “These steps should lower our overall operating costs for both the near and long term, reposition our people and resources to best capitalize on the opportunities we see in our core Institutional and Food & Beverage businesses, and enable us to focus on driving our successful global Pest Elimination expansion, Healthcare Infection Prevention business and Water and Energy growth initiatives.”

Ecolab plans to undertake changes geared to optimize its workforce, facilities, product lines and business portfolios in order to adjust to the current economy while positioning to leverage future growth. These changes include:

• A reduction of the company’s global workforce by approximately 1,000 positions, or 4%. Those whose jobs are eliminated will be offered severance and outplacement as appropriate.

• An acceleration of product line initiatives reducing finished goods’ SKU’s by 40% and optimizing formulations to reduce environmental and cost impact.

• The further optimization of the company’s supply chain including the planned reduction of plant and distribution center locations.

• The closure of two small non-strategic healthcare businesses and the write down of investments in an energy management business.


Ecolab expects to record a special charge in the fourth quarter of 2008 that will include a pretax charge of approximately $19 million ($18 million after tax) related to the write-down and exiting of the businesses mentioned above. In 2009, Ecolab expects to incur a pretax restructuring special charge of $65-$75 million ($42-$49 million after tax) as a result of these actions. These actions are expected to provide annualized pretax savings of approximately $70-$80 million ($45-$50 million after tax, or approximately $0.20 per share), with pretax savings of approximately $50 million (or about $0.13 per share) to be realized in 2009.

“While we are confident these steps are the right ones for Ecolab, we regret that circumstances required associates to leave the company,” said Mr. Baker. We appreciate their contributions and we’ve worked hard to do this in a respectful way, but understand the pain it causes as well.

Baker concluded, “Our unwavering commitment is to strengthen our businesses, our leading market positions, and our opportunities for future growth. In spite of the tough decisions we’ve had to make and the tough economic environment in which we find ourselves, we believe we are now even better positioned for the future. We have great growth prospects, a robust business model, the industry’s leading customer service, an opportunity to substantially increase our market share, and a strong balance sheet. And most importantly, we have a strong and experienced team ready to drive our business forward.”