Sabic Innovative Plastics LP is cutting production up to 20 percent at all of its engineering plastics production sites worldwide.
The move was effective Nov. 5. In a news release, officials with Pittsfield, Mass.-based Sabic IP said the move is ``a result of significantly softening resin demand caused by the global economic slowdown.''
The firm said it ``will communicate further details as appropriate … to optimize the supply chain and to minimize any disruption.'' A company spokesman said no further details were available.
It was not clear from the news release if any of Sabic IP's 10,500 employees will be affected. It also could not be determined if there will be any impact to the firm's structured products business, which includes downstream film and sheet production. That unit ranks among North America's 30 largest film and sheet makers, with annual sales of around $275 million, according to a Plastics News estimate.
In a May interview, Sabic IP President and Chief Executive Officer Charlie Crew said the firm was ``well-positioned'' in Asia, but the automotive and building markets were ``obvious challenges'' for the company in North America.
Sabic IP ranks as one of the world's largest producers of polycarbonate, ABS and other engineering resins. In North America, the firm makes PC and other specialty resins in Mount Vernon, Ind.; PC in Burkville, Ala.; and engineering resin compounds in Selkirk, N.Y.; Thorndale, Pa.; and Columbus, Ind.
Globally, Sabic IP's manufacturing sites include Bergen op Zoom, the Netherlands; Campinas, Brazil; Moka, Japan; and Rayong, Thailand.
Market analyst Greg Smith said that the Sabic move is ``somewhat surprising,'' but he added that demand ``certainly is off.''
``You can understand how a resin producer would look to cut production in this environment,'' said Smith, who's with Resin Technology Inc. in Fort Worth, Texas.
The announcement also comes only six months after Sabic IP opened a new compounding plant operating four extrusion lines in Shanghai. The firm also added a new specialty compounding line earlier this year at a plant in Chung-Ju, South Korea.
Jignesh Shah, an analyst with Chemical Market Resources Inc. in Houston, said he believes the Sabic cutback mostly will affect the firm's PC and ABS production, which is focused largely on electronics and automotive applications.
``This is going to be happening across the industry,'' Shah said. ``There's been a reduction in demand, and Asia's been affected more because that's where a lot of capacity additions had been.
``Raw material costs are down, but demand is falling even faster,'' he added.