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Chemical Makers Stage More Cuts

Economic downturn brings additional job reductions

by Ann M. Thayer
January 26, 2009 | A version of this story appeared in Volume 87, Issue 4

Credit: PolyOne
Markets for under-the-hood automotive parts, including those made with materials from PolyOne, are declining.
Credit: PolyOne
Markets for under-the-hood automotive parts, including those made with materials from PolyOne, are declining.

FOUR U.S.-BASED chemical companies are cutting jobs and scaling back production as end-use markets continue to soften. For two of the firms, these actions are repeat attempts to address stagnating economic conditions.

Rohm and Haas hopes to save $90 million through its latest actions, which build upon others announced in June 2008. The company is curtailing production and will idle or close underutilized plants. It will cut its workforce by about 5%, or 900 jobs, companywide, excluding its salt business, and it will freeze some discretionary spending and salaries.

"We will continue to control costs in order to compete effectively while preserving our capacity to accelerate performance when markets recover," President Pierre R. Brondeau says.

Meanwhile, PolyOne is again trying to mitigate the effects of waning demand, particularly in housing and automotive markets. A July 2008 manufacturing realignment targeted a largely U.S.-based downturn but has proved insufficient against "a precipitous decline in global demand," according to CEO Stephen D. Newlin. Additional steps are needed, he says, "to prepare ourselves for what may be a prolonged economic downturn."

As part of a new effort to save about $40 million annually, PolyOne will trim 8% of its workforce, or about 370 jobs, reduce the work schedules of another 100 to 300 employees, and freeze executive salaries. The company will close its Niagara, Ontario, vinyl compounds plant and idle other capacity.

Some of the biggest cuts will come at Huntsman Corp., which by year-end will eliminate 1,175 positions, or about 9% of its employees, plus 490 contractors. Along with shutting down its Grimsby, U.K., titanium dioxide plant, these moves should generate about $150 million in cost savings.

Nalco, meanwhile, has completed a reorganization that has created a new water and process services division and has removed 400 jobs since Oct. 1, 2008. Annual savings are expected to total more than $40 million.

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Chemical companies are acting swiftly, pulling all the available "levers," and taking tough steps to control costs, says Tim Hanley, vice chairman and U.S. process and industrial products leader at Deloitte. "This downturn is increasingly challenging because it is in the midst of a financial crisis, and these companies have to be mindful of their liquidity," Hanley says.



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