NEWTOWN SQUARE, Pa., June 24 /PRNewswire/ -- ARCO Chemical (NYSE: RCM)
announced today that it is implementing a program that will result in
$150 million in annual cost savings.  A key part of the savings will come from
a reduction of 800 to 1,100 employee and contractor positions over the next
few years, on a worldwide base of 5,300 positions.
    The changes are part of a broad initiative, discussed last month by CEO
Alan R. Hirsig at the company's Annual Meeting of Stockholders, to build
shareholder value, to increase efficiency, and achieve a double-digit
percentage reduction in the company's fixed and controlled costs, which are
roughly $750 million a year.  The cost reductions are to be substantially in
place by 1999.
    "Our drive is to be a highly competitive chemical company with leadership
profitability, excellent growth prospects, and greatly enhanced value for all
stakeholders, including shareholders, customers, and employees," Hirsig said.
"Other steps we've taken to enhance shareholder value include setting
significant stock ownership requirements for directors and executives;
adopting a new financial measure, Return on Capital Managed (RCM), as a way to
focus all parts of the organization on increasing the company's profitability;
and raising the percentage of employee compensation that is linked to the
company's financial success."
    ARCO Chemical remains committed to profitable growth in its core
businesses and continues its drive to introduce differential, value-added
products that meet market needs.  "Our program of cost reduction can be done
at the same time we continue to grow the company and is consistent with our
efforts to serve our customers," Hirsig added.
    A number of changes have already been implemented.  These include the
recent realignment of the company's business structure to speed
commercialization of growth opportunities and better reflect the realities of
the marketplace; creation of a Supply Chain organization to minimize raw
material and logistics costs, reduce working capital, and better meet customer
needs; and merging the Manufacturing and Engineering functions to achieve
production economies.  The restructuring effort will continue through the end
of 1998.  The company anticipates that a special charge to earnings will be
taken later in 1997 to account for the costs of the program.  The amount of
the charge has not been determined.
    "Once we are through this transition, we will emerge as a company that is
better prepared to grow, even more agile in its decision-making, and clearly
focused on building value for shareholders," commented Hirsig.  "Our ultimate
goal is to be a highly competitive chemical company with excellent growth
potential."

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