WICHITA, Kan. -- Koch Industries plans unspecified layoffs this year to stay competitive in the wake of mega-mergers in the oil industry, the company's president told workers in a memo made public Friday.
Joseph Moeller said that costs must go down and ''considerable reductions'' in employees are inevitable.
The internal memo, dated Jan. 7, comes as Koch celebrates its 60th anniversary this week amid a landmark $35 million settlement with the Environmental Protection Agency for polluting streams and waterways.
Moeller told employees that there was no rigid formula -- no percentage or dollar amount -- that the company was aiming for in the reductions. Some Koch businesses would see far greater cuts than others.
Those layoffs will begin in the first quarter of this year, Koch spokesman Jay Rosser said Friday.
The environmental penalties handed down Thursday were the latest in a series of problems for Koch, the nation's second-largest privately held company.
Last month, a jury in Tulsa, Okla., found that Koch had underreported thousands of oil purchases. Damages haven't yet been assessed, but the judge could fine the company a maximum of $214 million on the 24,587 claims the jury found to be false.
But, while company officials conceded those setbacks played a factor in the new layoffs, Moeller appears most concerned by recent mergers among major oil companies.
In the memo, obtained Friday by The Associated Press, Moeller told employees to consider the impact of industry changes such as BP Amoco's cutting $2 billion in costs through restructuring, while Exxon-Mobil and Royal Dutch Shell have even higher targets of $4 billion.
''Meanwhile, our industry is facing escalating regulatory activity, and profoundly challenging commodity markets. In our case, there have also been a series of unprecedented legal events,'' Moeller wrote. ''There's no reason to think these pressures will go away by themselves, or to imagine we won't face additional challenges in the future.''
Moeller called those setbacks a call to action.
Last year, Koch Industries laid off about 500 people as the company struggled to cope with global downturns in prices for oil, hogs and cattle. Koch employs between 12,000 and 13,000 people worldwide.
The company, which has a large refinery in Rosemount, Minn., involves nearly all phases of the oil and gas industry, as well as chemicals, chemical technology products, agriculture, hard minerals, real estate and financial investments.
Moeller, who took over as president in September, said at the time of his appointment that Koch Industries needs to become a more entrepreneurial organization and take some risks to make things happen. He also said then he did not envision any further layoffs.
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