DÜSSELDORF, GERMANY — Soft demand and harsh business conditions are prompting Degussa AG to enact a more drastic restructuring plan, including consolidating European PMMA molding compound production, closing a Plexiglas sheet casting line in Germany, and cutting additional jobs worldwide.
Dusseldorf-based Degussa already was making major changes following its acquisition this past March of Britain's Laporte plc. That deal created the world's second-largest chemicals maker, with sales of more than $15 billion and 18 production sites on three continents. A sharp downturn in business is leading the company to ax another 1,000 jobs by 2004, on top of the 3,000 it had already planned following the merger. The group employed about 57,500 as of Sept. 30.
Degussa predicted recently that 2001 pretax operating profit would tumble by 20-25 percent compared with a year ago. But, on the positive side, it also said that through this year's first nine months the specialty acrylics business unit “did particularly well” and that performance plastics helped drive up pretax earnings in its Plexiglas business unit.
Global overcapacity for polymethyl methacrylate, however, led Degussa's RÃ¶hm Methacrylates business unit last month to cease production of PMMA molding compound pellets in Wesseling, Germany, and consolidate it at its Worms, Germany, site. The company said that concentration of production at one site in Europe would not affect product quality or its ability to supply customers worldwide on a just-in-time basis. The group, via its Cyro Industries joint venture, continues to make PMMA compounds at sites in Wallingford, Conn., Osceola, Ark., and Sanford, Maine.
In a Nov. 12 statement, Degussa Chairman Utz-Hellmuth Felcht also noted the company this summer closed a Plexiglas PMMA casting line in Darmstadt, Germany, as part of “product optimization measures.” RÃ¶hm owns the Plexiglas trade name worldwide, except in the Americas, where it markets those materials as Acrylite. RÃ¶hm continues to make cast acrylic sheet in Austria, Portugal, and Weiderstadt, Germany, as well as in the United States, via Cyro.
Felcht also noted that Degussa is accelerating actions to close eight unprofitable plants worldwide, temporarily shut down six other plants, slash planned capital investment by nearly 80 percent, and introduce short-time working in three plants.
Meantime, RÃ¶hm pointed out that it continues to expand into specialty foam products. The firm acquired Inspec Foams Inc. in Plano, Texas, earlier this year as part of its parent's merger with Laporte, and added Inspec's Solimide high-temperature-resistant polyimide foam to its portfolio as a result. Those products, manufactured by Inspec in Magnolia, Ark., are used for thermal and acoustic insulation.