Geon Co. plans to shutter two plants and reduce output at two others as it continues to fight for its niche in the PVC compounding business.
Avon Lake, Ohio-based Geon acquired the four plants, along with two others, in its 1997 purchase of Synergistics Industries Ltd. of Mississauga, Ontario.
Operations at compounding facilities in Lindsay, Ontario, and Conroe, Texas, will close sometime after January. Products made at those plants will be shifted to other operations, Dennis Cocco, Geon's vice president of corporate investor affairs, said Nov. 18 by telephone.
Geon also plans to trim PVC compounding at plants in Orangeville, Ontario, and St. Remi, Quebec. Those plants will continue to make plasticizers.
The moves will cut about 250 employees, mostly former Synergistics workers, from Geon's payroll. Severance packages and other closing expenses will cost Geon $23 million during the next two fiscal quarters, according to a news release.
Synergistics had been an up-and-coming favorite on the Toronto Stock Exchange before Geon's takeover. Its stock had soared from C$3 per share in 1996 to C$15.75 just before Geon's bid of C$22 per share was publicized.
But even before Geon took over, Synergistics managers had been considering ways to make their operations more efficient, Cocco said.
``They were asking themselves the same questions, and looking to realign their business,'' he said.
The closed plants ``represent extra capacity,'' Cocco said, adding that Geon's total output will not change, but some products now will be made closer to the company's customers.
Geon sees the changes as part of an overall strategy to reduce costs as the company broadens its horizons beyond PVC resin production.
Synergistics, which also compounds cross-linked polyethylene, gave Geon its first taste of non-PVC polymers. At Geon's last annual shareholders meeting, Chief Executive Officer Bill Patient said his company ``will no longer focus only on vinyl-based products.''
Geon in June announced it was spinning off its PVC suspension resin business into a proposed joint venture with Occidental Chemical Corp. of Dallas. Under that deal, expected to close in early 1999, Geon would trade outstanding debt and its suspension resin capacity for two U.S. compounding facilities from OxyChem. Geon would own a 24 percent stake in the joint venture. OxyChem and Geon will produce dispersion resins separately.