EXECUTIVE EARLY RETIREMENTS PUSH UP COST OF RESTRUCTURING AT NAVIERAS

EXECUTIVE EARLY RETIREMENTS PUSH UP COST OF RESTRUCTURING AT NAVIERAS

The cost to reorganize Navieras de Puerto Rico Inc. will reach $14 million over the next several years, a company official said.

Rafael Fabregas, executive director, said the figure is higher than originally anticipated because more management executives from its operating company chose early retirement, which Navieras offered to make the company more efficient."They're out to save money no matter what it costs them," said one shipping executive who asked not to be identified.

He pointed to the recent resurfacing of rumors that government-owned Navieras will be sold or merged with Sea-Land Service Inc., a competing shipping line.

Although Navieras denies any negotiations are taking place, some industry experts see the company's consolidation and trimming as signs to the contrary.

As many as 89 executives from Puerto Rico Marine Management Inc. (PRMMI), Navieras' operating company, have volunteered to retire, far more than the 35 Navieras executives to jump ship.

Mr. Fabregas is concerned because PRMMI may have to rehire new management to replace the fleeing executives.

"We are trying by all means to replace these jobs internally to avoid having to bring these people from outside," Mr. Fabregas said.

Navieras has been striving to stem losses in recent years, after posting nearly $300 million in accumulated losses since its birth in 1974.

Part of the reorganization includes the likely consolidation of customer service, booking and documentation departments in Tampa, Fla.

That means the loss of 75 positions in Puerto Rico, at least 31 of which will receive severance pay.

As it stands, the net savings for Navieras will be about $9 million a year in salaries, benefits, bonuses and operating expenses, Mr. Fabregas said.

Losses will be recovered in less than two years, according to the plan.

Of the $14 million "investment," as Mr. Fabregas calls the reorganization cost, $7.6 million will go to employee pension benefits, $2.1 million to health and welfare employee benefits, $2.5 million for relocation of affected personnel and $1.8 million for severance pay for managers and union personnel.

"We have to comply with federal legislation and union rules," Mr. Fabregas said, referring to the laws and contracts governing the retirement or firing of employees.