Bayer AG of Leverkeusen, Germany, has confirmed that 5,000 of its 15,000 announced job cuts will come from its polymers group.
The Nov. 12 announcement clarifies a decision made in September to increase Bayer's number of global cuts from 10,300 to 15,000. Previously only 1,800 cuts - about 17 percent of the prior total - were to come from polymers. The new data lifts the percentage cut from polymers to 33 percent.
Bayer has been hurt by the slowing global economy, as well as by pending litigation connected to its Baycol/Lipobay cholesterol reduction drug, which has been linked to 31 deaths worldwide. To date, 5,700 Baycol/Lipobay-related lawsuits have been filed against Bayer, almost all in the United States.
``At the beginning of the year the world economy was still expected to recover, but that optimism has faded considerably,'' Bayer Chairman Werner Wenning said in a Nov. 12 news release. ``For polymers and chemicals, we do not expect a short-term improvement in the business environment.''
The 5,000 cuts represent about 22 percent of Bayer's global polymers work force of 23,000, according to Bayer spokesman Michael Preuss. Bayer operates 50 polymers plants worldwide, but it's undetermined how many of them will be closed or affected.
Almost 1,000 of the job cuts already have been announced. They include:
* 430 from a polycarbonate, ABS, synthetic rubber and inorganic chemicals plant in Antwerp, Belgium.
* 300 from a synthetic rubber plant in Sarnia, Ontario.
* 150 and complete closure of a polycarbonate, ABS and engineering resins plant in CamaÃ§ari, Brazil.
* 100 and complete closure of a polyether plant in Rieme, Belgium.
All 15,000 companywide cuts are expected to be in place by the end of 2005. It is not clear what effect the cuts will have on major North American plastics facilities in Baytown, Texas; Addyston and Hebron, Ohio; and Berlin, Conn.; as well as a major regional headquarters in Pittsburgh.
Germany will account for 40 percent of the polymers job cuts. The remaining cuts primarily will be split between North America and the rest of Europe.
Major expansions to Bayer's Asian polymer plants will be unaffected by the cuts. Bayer is on track to open a PC plant with annual capacity of 220 million pounds in Xiaojing, China, by 2006. An additional 220 million pounds of PC capacity could be added in Xiaojing or at a PC plant in Map-Ta-Phut, Thailand, by 2006 as well. The firm will continue to seek approval to build a polyurethanes plant in Xiaojing and add 220 million pounds of annual PC capacity in Uerdingen, Germany.
``Asia is a growth market for us and we plan to continue further growth there,'' Preuss said in an interview from Leverkeusen. ``At the same time we plan to consolidate our products into fewer plants [in Europe and North America].''
Polymers - which includes plastics, rubber, polyurethanes and coatings - is the largest of Bayer's four units, accounting for almost 38 percent of total group sales through September.
Sales in polymers dropped more than 4 percent to 8.16 billion euros ($8.21 billion) in that period, while profit before exceptional items dropped almost 25 percent to 380 million euros ($382.5 million).
Through September, North America was Bayer's worst-performing region, posting a loss of 204 million euros ($205.4 million) as sales dropped 5.5 percent vs. 2001 to 6.65 billion euros ($6.69 billion). Overall, Bayer's nine-month profit grew 79 percent to 1.47 billion euros ($1.48 billion), compared with the 2001 period, even though sales shrank more than 3 percent to 22.2 billion euros ($22.34 billion) in that period.