Issue Date: May 3, 2004
Dow Chemical will cut about 3,000 jobs worldwide in 2004 through a combination of business reorganization, attrition, plant shutdowns, and divestitures. Dow Chief Financial Officer J. Pedro Reinhard told analysts last week that 350 of the reductions occurred in the first quarter. Reinhard said the job cuts follow a reorganization implemented in January by Dow's new CEO, Andrew N. Liveris. The program will cause $300 million in charges this year but will lead to annual savings of $350 million. Dow cut 3,600 jobs in 2003 and now employs about 46,000. Also last week, Dow announced it is closing its Nashua, N.H., site, which produces sarcosinate-based surfactants for personal care applications. The company says profitability at the plant has been suffering because of high fixed costs and decreased production. Dow will offer severance benefits to some 64 workers. With the closure, Dow is exiting the sarcosinate surfactant business. Dow acquired the facility as part of its 1997 purchase of Sentrachem and the Hampshire Chemical unit that came with it. Dow continues to operate Hampshire facilities in Waterloo, N.Y., and Deer Park, Texas.
Taking advantage of the improved financial outlook for chemical firms, Kohlberg Kravis Roberts expects to sell some of its holdings in Borden Chemical. The adhesives resins maker says it plans to file a registration statement with the Securities & Exchange Commission for an initial public offering of stock in the third quarter. Last month, KKR arranged to buy four Dynamit Nobel chemical businesses from MG Technologies for $2.7 billion. KKR plans to consolidate them into Rockwood Specialties, the former Laporte chemical operations it bought in 2000.
Novozymes and the National Renewable Energy Laboratory claim to have further reduced the cost of enzymes used to convert cellulosic biomass into sugars for fuel ethanol production. In February, they reported that a three-year R&D pact had yielded a 12-fold enzyme cost reduction; they now say the reduction is 20-fold, cutting the cost to below 30 cents per gal of ethanol. NREL has extended its contract with Novozymes by another year to pursue an enzyme cost goal of 10 cents per gal of ethanol. Separately, Canada's Iogen says it has shipped the world's first cellulose-based fuel ethanol for commercial use from a demonstration plant in Ottawa.
An April 23 explosion at Formosa Plastics' polyvinyl chloride plant in Illiopolis, Ill., left four employees dead, another four injured, and the plant in flames for two days. Roughly 1,000 area residents were evacuated. However, Formosa says air and water monitoring has so far come up with nothing of concern. The Chemical Safety & Hazard Investigation Board says its probe into the incident has already begun and may take more than a year to complete. Formosa bought the plant from Borden Chemicals & Plastics in April 2002.
As part of the $1 billion chemical asset paring it announced last September, Akzo Nobel has agreed to sell its phosphorus chemicals business to financial buyer Ripplewood Holdings for $271 million. The deal follows close on the heels of Akzo's agreement to sell its refining catalyst business to Albemarle for $750 million. Depending on government regulatory approvals and clearance from employee unions, the deal with Ripplewood is to close by the end of June. "This is a further stage in our program to create more financial room to maneuver for the company," Akzo Chairman G. J. (Hans) Wijers says. The business, which has annual sales of $220 million and employs some 280 people in Germany and the U.S., makes organophosphorus flame retardants, plasticizers, and lubricant additives.
Three firms have undertaken a changing of the guard. In the first, two veterans of Reichhold have returned to lead the firm, a U.S. arm of Japan's Dainippon Ink & Chemical. John S. Gaither, who left in 1998 after 32 years with Reichhold, returns to the firm as president and CEO. Douglas E. Frey, who left in 2001 after 17 years, returns as chief operating officer. Changes at two other firms were expected. Robert L. Wood, Crompton president and CEO, adds the chairman's post, succeeding Vincent A. Calarco. James L. Hambrick, Lubrizol's president, adds the CEO title as William G. Bares relinquishes that job but remains chairman until the end of this year.
Several accidents involving chemicals have occurred in China recently, in addition to an accident at Tianyuan Chemical that killed nine people (C&EN, April 26, page 12). Two people were killed on April 21 in Taizhou, Zhejiang province, after an explosion at a toluene plant. Three people died on April 19 from poisoning at an oil refinery in Maoming, Guangdong province. On April 20, an explosion at Jilin Chemical killed two. And the same day, 282 people were injured by chlorine leaking from tanks in Nanchang, Jiangxi province. The tanks, in a residential area, were remnants of a plant that had moved several years earlier.
Tosoh will build a 110,000-metric-ton-per-year polyvinyl chloride plant in Guangzhou, Guangdong province, in southern China. The facility, co-owned with a Japanese partner, is scheduled to open in 2006. Tosoh says it is also expanding its vinyl chloride plant in Yamaguchi, Japan, by 400,000 metric tons to supply the China plant and its Philippines PVC facility. And the firm is boosting aniline and carbon monoxide capacity in Japan for isocyanate production. All told, Tosoh says it is investing $432 million in the projects.
Bristol-Myers Squibb and Merck will collaborate to develop and commercialize BMS's muraglitazar, currently in Phase III clinical development. The drug is used in treating blood glucose and lipid abnormalities in patients with type 2 diabetes. Bristol-Myers will receive $100 million up front and $275 million in payments based on meeting regulatory milestones. The two companies will share equally in future development costs and copromote the drug worldwide. Merck will receive payments based on sales levels. Merck has also received rights to a muraglitazar backup compound, which is entering Phase II clinical trials for diabetes treatment.
Chemical Synthesis Services has acquired a controlling interest in Albachem, a peptide synthesis firm in Edinburgh, Scotland. Stephen Barr, CSS managing director, says the acquisition "furthers our position at the interface between chemistry and biology." Albachem specializes in small protein structures that cannot be produced by biological techniques. Meanwhile, Dow Chemical's Dowpharma unit has added peptide manufacturing to its biologics services, according to Business Director Nick Hyde. Dow says its technology includes its new Pseudomonas fluorescens microbial platform and is particularly suited to making medium- to long-chain peptides.
Iran's Arak Petrochemical has taken technology licenses from Basell for expansion of two polyolefin plants in Arak, about 200 miles south of Tehran. Arak will use Basell's Spheripol process to boost polypropylene capacity by 50% and its Hostalen process to increase polyethylene by 40%. According to Basell, more than 2 million metric tons per year of polyolefins capacity in operation or under construction in Iran is based on its technology.
Indelpro, a joint venture between Basell and Mexico's Alfa Group, is building a 350,000-metric-ton-per-year polypropylene plant in Altamira, Mexico, scheduled to open in 2006. The expansion will increase Indelpro's capacity to 570,000 metric tons. The plant will use Basell technology and will be fed under a long-term propylene supply contract with Mexican national oil company Pemex. Indelpro says demand for polypropylene in Mexico is growing at 10% annually.
U.S. chemical prices rose for the fourth straight month in March, according to the Labor Department. The producer price index for chemicals and allied products increased 0.4% from February and 2.2% from March 2003 to 168.1 (1982 = 100). Meanwhile, the index for industrial chemicals slipped 0.3% from February to 150.5. It was, however, still 0.9% ahead of its March 2003 level.
Lonza will work with RNA-TEC to provide drug industry customers with RNA oligonucleotides in quantities up to industrial scale. RNA-TEC was formed in 2000 to commercialize tert-butyldimethylsilyl-based oligo synthesis technology from the University of Leuven's Rega Institute, in Belgium. Oligo manufacturing will take place at Lonza's site in Visp, Switzerland, where the firm recently added oligo capability.
Sachem is doubling capacity at its Cleburne, Texas, tetramethylammonium hydroxide plant by July 1 via expansion and process improvement efforts. TMAH is used as a developer in semiconductor and liquid-crystal display photolithography.
Qafco has opened a $550 million expansion of its fertilizer complex in Qatar, boosting ammonia production by 50% and urea production by 65%. Qafco is a joint venture between the government of Qatar and Yara International, Norsk Hydro's former fertilizer business.
DuPont is building a $15 million glass interlayer production line in Fayetteville, N.C., by early 2005. The line will make SentryGlas Plus, a polymer sheet used to make safety glass for cars and buildings.
Celanese shares will be delisted from the New York Stock Exchange in the second quarter of this year, following completion of the takeover by Blackstone, a private equity firm. Also, Celanese has appointed new shareholder representatives to its supervisory board.
Air Products & Chemicals will expand nitrogen trifluoride capacity at its Hometown, Pa., plant by nearly 50%. The firm, which calls itself the world's leading producer of the gas--used to clean electronics manufacturing chambers--says the project will be complete in the spring of 2005.
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