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June 05, 2000 02:00 AM

Bayer to cut back ABS staff, compounding

Frank Esposito
Senior Staff Reporter
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    Challenging business conditions are leading Bayer Corp. to eliminate 200 jobs at its ABS plant in Addyston, Ohio, by late 2002. "The ABS business has been challenging for everyone," said Jerry MacCleary, vice president of styrenics for Pittsburgh-based Bayer. "Margins are still unacceptable, which is why we're streamlining our business and lowering our costs."

    Bayer announced the cuts — amounting to one-third of the Addyston work force — on May 25, a month before the firm will complete the shutdown of its ABS works in Muscatine, Iowa.

    Bayer in late 1997 closed an ABS plant that employed 90 in Lasalle, Quebec, moving resin production to Addyston and compounding production to Newark, Ohio.

    Older suspension ABS technology will be replaced by continuous mass technology at Addyston as part of a $100 million investment. The site's annual capacity will remain at about 440 million pounds after the changes.

    Bayer also is removing labor-intensive custom color and small-lot compounding work from Addyston. One compounding line will be removed by the end of this year, with some of that work being transferred to a Bayer compounding plant in Hebron, Ohio.

    "We'll still do basic white or black compounds, but it takes a lot of resources to compete in custom color and small lots," said Bruce Kleinert, Bayer's ABS business management director.

    MacCleary added that a number of factors — including commodity pricing, excess capacity, new competitors, competition from other resins and slower overall market growth — have impacted ABS in recent years and will continue in the near future.

    Extrusion-grade ABS prices dropped almost 20 percent between mid-1996 and mid-1998 before a pair of price increases earlier this year lifted prices close to their 1996 levels.

    Injection molding-grade ABS prices dropped about 20 percent in 1998 and stayed at those depressed levels until earlier this year, when producers were able to enforce a pair of increases that have lifted prices an average of about 12 percent.

    General-purpose, sheet-grade ABS currently sells for about 90 cents per pound, according to Plastics News' resin pricing chart, while high-impact, injection-grade ABS currently sells for about 78 cents per pound.

    North American ABS demand increased 5 percent in 1999, according to the American Plastics Council in Arlington, Va. That was the market's second consecutive annual increase after demand had slipped for three straight years from 1996-98.

    The most significant new entry to the North American ABS market — in which Bayer ranks second to GE Plastics — has been BASF Corp., which opened a styrenics plant last year in Altamira, Mexico. Industry contacts estimate the plant is adding at least 150 million pounds of additional ABS to the North American market each year.

    "BASF is a new competitor and they have a plant to fill," MacCleary said. "But there was underutilized capacity in the market before they came in, and [BASF's plant] just adds to that."

    In spite of the recent challenges, MacCleary said Bayer remains committed to the ABS business, which it acquired from Monsanto Co. in 1995.

    "We'll continue to take steps to deliver a high quality product at a competitive price," he said.

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