Hit by what it calls sharply deteriorating performance in recent months, diversified Japanese chemical firm Teijin Ltd. said April 27 it wants to drastically restructure some plastics businesses, including PET film and fibers, and polycarbonate resin.
Osaka-based Teijin said it wants to make a long-term shift away from those commodity materials, which now are 50 percent of its sales, and seek to boost business with high-performance materials, pharmaceuticals, home health care and green chemistry. It also said it is creating a senior management position for the so-called BRIC emerging markets in Brazil, Russia, India and China.
Teijin announced it will freeze major capital investment for two years and cut capital spending this year by almost 50 percent. It also plans to eliminate 2,500 temporary and contractor jobs, with the sharpest cuts coming in its materials businesses.
The restructuring plans come as Teijin said sales in its fiscal year ended March 31 are expected to fall 9 percent to 943.4 billion yen ($9.78 billion), with a loss of 43.3 billion yen ($450 million). It said operating rates and demand in its materials businesses fell, and its traditional plastics businesses are among the hardest hit.
In the poorly performing polyester fibers, PET film and polycarbonate resin businesses, we will restructure loss-making businesses and create an optimal global production configuration by reorganizing production facilities and lines, Teijin said.
A Teijin spokeswoman said many details of any restructurings have not been decided. She did not elaborate.
While those plastics businesses now account for 50 percent of Teijn sales, the company said it wants to shrink that figure to 25 percent by 2020 and grow its business in aramid fibers, carbon fibers and other advanced materials from their current total of 10-30 percent of sales.
It also said it wants to increase its focus on biomaterials, recycling systems and other green chemistry areas, and push development of pharmaceuticals and home health-care services, which currently account for about 15 percent of sales.
Teijin owns part of U.S.-based bioplastics maker NatureWorks LLC, as does American agricultural products maker Cargill Inc. Teijin said it will work on developing heat-resistant polylactic acid resin and other bioplastics made from inedible vegetation.
Teijin admits it lagged in its response to the commoditization of the polycarbonate business, and said it is looking at moving PC production from Japan to facilities in Singapore and China to try to restore profitability to a sector where operating rates are at 70 percent.
In PET films, Teijin said it will increase its focus in Asia, including in solar-cell films, and could shut down loss-making U.S. and European production lines.
In December, Teijin shut down a PET film plant in Circleville, Ohio, as part of its joint venture with U.S. chemical firm DuPont Co. The Teijin spokeswoman declined to say if other cuts will be made, but said the company could switch production lines to higher-demand items like thick films.
In polyester fibers, Teijin said it will explore higher-performance and environmentally friendly materials, as it tries to boost sales into the automotive interiors market and set up specialty retail stores to sell private-label apparel.