Sabic Innovative Plastics US LLC is finalizing an engineering resins distribution deal with Ashland Distribution, and Sabic also has confirmed a number of job cuts at plants in Indiana and Mississippi.
The Sabic IP-Ashland partnership will cover the U.S., Canada and Mexico and is expected to become official in mid-April, officials with both firms said in a March 16 news release. Pittsfield, Mass-based Sabic IP is a major producer of polycarbonate, ABS and other engineering resins.
The deal “will enhance [Ashland's] comprehensive offering to customers,” Ashland Distribution plastics Vice President Michael Gilbert said in the release.
Dublin, Ohio-based Ashland already distributes PC for Bayer MaterialScience LLC and ABS for Ineos Group. Ashland spokesman Ken Gordon said March 18 that both Bayer and Ineos remain in the Ashland lineup. He declined to speculate as to how the Sabic IP deal will affect Ashland's status with Bayer and Ineos.
Ashland generated more than $4 billion in global plastics and chemicals distribution in 2008. In October, the business opened a new warehouse in Monterrey, Mexico.
Bayer and Ineos also distribute engineering resins through PolyOne Corp. of Avon Lake, Ohio. PolyOne officials declined to say if or how they would benefit from an Ashland-Bayer-Ineos split.
Likewise, officials at Pittsburgh-based Bayer declined to speculate on what action they would take in light of the Ashland-Sabic IP deal. A Bayer spokesman said the firm “has many channels to market, and we review our strategy on a regular basis.”
A distribution industry source said the dollar value of business Ashland will gain through Sabic IP is greater than what it would lose if it parted ways with Bayer and Ineos. The contact added that although the deal “has good long-term potential” for Ashland, some customers may be unwilling or unable to switch from Bayer or Ineos material to Sabic products.
Ed Holland, president of commodity and engineering resins distributor M. Holland Co. in Northbrook, Ill., said he hopes the Ashland-Sabic IP deal “will create a number of shifts in the distribution business” and also hopes his firm “will have some opportunities it didn't have before.”
M. Holland distributes polystyrene and acrylic-based resins for Ineos Group's Ineos Nova joint venture, but doesn't handle the firm's ABS products.
The Sabic IP-Ashland deal is believed to be the first time that Sabic IP — formerly GE Plastics — has worked extensively with an independent resin distributor. GE Plastics for several years operated Polymerland, a resin distribution unit that handled material for GE Plastics and several other resin makers.
The firm began de-emphasizing that business and phasing out the Polymerland brand name several years ago. Saudi Basic Industries Corp. of Riyadh, Saudi Arabia, then bought GE Plastics from General Electric Co. for $11.6 billion in 2007.
Meanwhile, Sabic IP officials also confirmed 82 job cuts will take place at its resin and compounds complex in Mount Vernon, Ind., by mid-April, according to spokesperson Shelia Naab. The firm already had cut 78 jobs there in December, along with 14 job cuts at a resin plant in Parkersburg, W. Va., and 40 at its Pittsfield headquarters. Sabic IP expects to cut 1,000 out of 9,500 global jobs and reduce its resin output by 20 percent by the end of 2009.
All overtime has been eliminated in Mount Vernon, and some of the firm's compounding operations have been reduced from a seven-day to a five-day workweek. Plastic sheet operations in Mount Vernon will be unaffected by the move, officials said.
Sabic IP executives in Mount Vernon and throughout the company also have had their base pay reduced. A pay freeze for all salaried employees companywide is in place as well.
Sabic IP also has eliminated 45 jobs at an ABS resin plant in Bay St. Louis, Miss. The firm now employs 100 in Bay St. Louis and 1,200 in Mount Vernon.
“We have made some difficult decisions to reduce costs in order to emerge from this economic crisis as a stronger company for our employees, customers and the communities in which we operate,” Sabic IP spokesperson Jodi Kennedy said.