A Schulman, the US plastics compounder and distributor, is slashing 60 jobs – mainly in Europe – as it comes to terms with the fallout from last year’s acquisition of compatriot compounder Citadel Plastics. In a filing with the US Securities and Exchange Commission, the company said the job cuts – including 42 in EMEA, 15 in North America, two in Asia-Pacific and one in Latin America – will be made across all businesses, with the exception of the Engineered Composites segment. Middle management will be the most affected.

Schulman said the move is part of a restructuring scheme aimed at saving $5-6 million annually by the end of 2018.  Averaged over the next several fiscal quarters, it expects to take post pre-tax restructuring charges of $9-11m for employee termination benefits and other costs to be paid in cash.

When announcing the acquisition of Citadel, which is known for its Lucent, BMC, Matrixx and Fiberfil brands among others, the Akron, Ohio-based compounding specialist said it expected the deal to nearly double revenue and achieve synergies of around $25 million within 18 months. Instead, it has had to struggle with triple-digit net losses posted for the fiscal year 206, which ended on Aug. 31. For the fiscal fourth quarter it was forced to take a goodwill impairment charge of $401.7 million.

The company said the difficulties reflected a combination of items, including “fraudulent activity” discovered at Citadel's Lucent subsidiary, as well as a “sharply lowered outlook” for oil field service activity and other factors that reduced the businesses’ long-term outlook.

Specifically, Schulman pointed to “quality reporting issues” affecting certain product lines at two former Citadel manufacturing facilities belonging to Lucent Polymers. It said an investigation turned up discrepancies between laboratory data and certifications provided by Lucent to customers with respect to certain products compounded from recycled or reclaimed polycarbonate and polypropylene.

In fiscal 2016, the company recognized $7.3 million of Lucent-related costs, including $1.8 million in litigation related costs, along with $4.7 million of recurring production and material costs. This past June it sued Citadel and its former owners for damages. In the past six years the company has passed through the hands of two private equity investors.

The problems at Citadel also have led to a management reshuffle at Schulman. In August it replaced CEO Bernard Rzepka with the company’s then-chairman, former CEO Joseph Gingo, who had moved to the board of directors in 2014.