NEWS ANALYSIS
“
At
Caojing,
for
example,
both our
lines are
running
at the
moment.
As there is
a much
shorter
distance
to market,
the
logistics
costs are
much
lower
This, said Thomas, reflects how more
than half of all polycarbonate is now
being sold in Asia.
“At Caojing, for example, both
our [100-ktpa polycarbonate] lines
are running at the moment. As well
as lower logistics costs, we have
more flexibility.
“With both lines running in parallel
we can leave each line running at a low
rate on a constant product line. Doing
fewer switches means less waste and
increased cost benefits.”
In the urethane chemicals arena,
Chemicals industry
Chemical majors are undergoing a
renewed phase of operational and
employment cutbacks in response
to the continuing sharp fall-off in
demand, particularly from
customers in the automotive and
construction markets.
Huntsman Corp is cutting 1,175
positions, more than 9% of its 12,770strong
workforce, while another 490
full-time contractors will also lose their
jobs. Huntsman also announced that its
Pigments Division is closing its 40ktpa
titanium dioxide plant in Grimsby.
Production was scheduled to cease
during the first quarter of 2009, with
the loss of 200 jobs.
BASF introduced short-time working
at several of its European sites in
December 2008 in response to a
significant global business decline.
Demand for chemical products fell
further as customers continued to
destock, so that capacity utilisation
rate within the BASF Group was below
75% in early 2009. Only demand for
crop protection chemicals and
products for the food industry was
reported as remaining high.
Since implementing capacity
reductions that included the closure of
80 plants worldwide and reducing
output at another 100 facilities, BASF
has used flexible working time
arrangements such as reduction of
overtime and holiday accounts at the
10 PROCESS ENGINEERING : MAY/JUNE 2009
Bayer had yet to idle any of its MDI
plants, which have a combined
capacity of around 1000 ktpa. The MDI
plant in Caojing is operating at just
about 50% of its 350-ktpa nameplate
capacity due to market conditions.
This compares with an older MDI
plant in Nihama, Japan that is running
at about 60%, noted Thomas, pointing
out that “below 60% the older plants
just won’t run.” He added that the
commercial breakeven point BMS
wants to achieve is above 80%, and
over 90% for price increases.
Crunch time for manufacturers
affected sites worldwide. The process,
it said, is helped by the company's
integrated approach to production,
which allows employees to be
transferred between plants that have
varying capacity utilisation rates.
Flexible working time arrangements
are no longer sufficient to absorb the
effects of production cuts everywhere,
however, especially for sites that
manufacture products for the
automotive industry. For example,
short-time working was introduced in
February for approximately 1,500
employees at BASF Coatings’ site in
Münster, Germany, and for 180
employees in Schwarzheide, Germany.
More recently, BASF has announced
the idling of the smaller of its two
steam crackers at its main
Ludwigshafen site. The shutdown of
the unit, which has capacity of 220kta
of ethylene, will last at least three
months. In line with its previous policy,
staff will transfer to other production
plants, bringing the total temporarily
transferred to over 500.
Among other companies taking
drastic action is Dow Chemical, which
recently announced the elimination of
11,000 jobs globally as it closes 20
plants permanently and temporarily
shuts a further 180 units. The plants
being idled represent 30% of Dow’s
global production and cuts are being
implemented across the board.
“Everyone was worried that as we
made bigger and bigger plants that
the turndown would not be adequate
to match market demand, so we have
designed them so they can be turned
down a lot further,” continued Thomas.
“Typically the new MDI plant can run
at half-rate, it is designed to,” Thomas
continued. “However, engineers overdesign
things for any eventuality, so
they might well be able to operate
below that. Ultimate flexibility is the
dream as starting up and shutting
down is always a bad thing.”
Another victim is Rohm and Haas
Co, which is being acquired by Dow. It
has announced a second phase of
cutbacks, further to its actions
announced in June of last year. The
latest measures will impact around 900
positions across almost all regions and
businesses within the company in 2009.
Annual cost savings of up to
Euro100 million are the target for
Dutch chemical company DSM, as it
attempts to lose some 1,000 staff by
2010, while DuPont announced that
it is shedding 6,500 jobs. And French
producer Arkema is closing or reducing
output at 40 sites worldwide, with an
associated cost-reduction programme
of Euro500m up to 2010.
The number losing their jobs at
LyondellBasell is also high. Some 3,000
jobs, around 17% of the workforce, are
to be axed as the company seeks to
cut $700m from fixed costs by 2011.
LyondellBasell hopes to achieve a
substantial part of its target in the
2009 financial year. One of its latest
moves is to close its LDPE unit in
France, at Fos-sur-Mer, where it has
had 80 permanent staff.
SABIC linked an 86% slump in
operating profits for the fourth quarter
of 2008 with the decline in demand for
petrochemical products, particularly
specialty plastics. As a result, Sabic
Innovative Plastics is cutting output by
up to 20% at all of its sites.
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