Huntsman may eliminate as many as 500 jobs in Switzerland through the closure of production facilities and the elimination of administrative positions at the firm’s site in Basel.
The planned job cuts will affect Huntsman’s textile effects division. Huntsman acquired the Swiss assets when it bought the textile effects division of what was then Ciba Specialty Chemicals in 2006 for $250 million. With plants in 14 countries, the business develops and manufactures dyes and other chemicals used by the textile industry.
“We need to take bold action to fundamentally improve the poor financial performance of our textile effects division,” CEO Peter R. Huntsman said in a statement. “The recent strengthening of the Swiss franc has greatly impacted our cost structure in Switzerland.”
The Swiss franc appreciated almost 30% against the dollar between January and August before retreating after a Swiss government intervention early last month. The franc is now about 4% higher than at the start of 2011, but about 33% higher than when Huntsman bought the business in 2006.
In a note to investors, analysts at the investment bank Jefferies said about 50% of the cost of operating the textile effects division is tied to the Swiss franc. Huntsman will reap annual cost savings of $15 million to $30 million if the plant closures proceed, the analysts estimate.
Huntsman said the Swiss downsizing will be accompanied by an expansion of capabilities in other parts of the world, primarily in Asia. The company plans to hire 100 new people in “key” markets. “As customers and competitors alike have increasingly moved their centers of business to Asia, we must realign ourselves,” Huntsman said in the statement.
The Swiss-based R&D capabilities of the textile effects business will not be reduced, Huntsman said. But separately the company announced it will invest $40 million to build a corporate R&D center in Shanghai’s Minhang district. To be complete by mid-2013, the facility will accommodate up to 400 technical experts, the firm said.