Take Stock of the International Coatings Groups that Announced Closures and Layoffs in 2023

Along with the economic downturn and declining investment, many chemical companies around the world are facing severe challenges in 2023. The performance of large groups is still not optimistic. The profits of many companies have dropped by more than 50%, and the sharp decline in earnings combined with the sluggish market has also throw them into new predicaments.

In order to cope with this continued uncertainty, paint companies that have sensed a potential crisis are saving costs by continuously divesting, selling, or even shutting down factories and laying off employees to achieve cost reduction and efficiency improvement. In 2023, nearly 20 giants such as Dow and BASF have made relevant burden reduction measures.

1. Dow

On January 26, Dow Chemical announced that in order to achieve the goal of cost savings of US$1 billion in 2023, it will lay off approximately 2,000 employees worldwide (Dow has approximately 37,800 global employees, and this layoff accounts for approximately 5% ).

In addition to the layoff plan, the US$1 billion cost-saving action also includes a series of measures such as closing some production facilities, further evaluating asset allocation, especially in Europe and other places, reducing turnover expenses, reducing purchased raw materials, logistics and utility costs, etc.

On September 20, Dow launched a new MDI distillation and prepolymer unit at its manufacturing site in Freeport, Texas, replacing Dow's North America facility in Lapo, Texas. Concurrent with the launch of the new MDI facility, Dow shut down polyurethane production equipment at its La Porte plant.

2.BASF

In August, it was reported that the styrene and propylene oxide (PO) plant of Ellba, a joint venture run by Shell and BASF, had shut down due to technical issues. Ellba, a company located in Moordijk, the Netherlands, is a joint venture between Shell and BASF, with Shell responsible for operating the plant. The factory exploded and caught fire on June 3, 2014. Before the accident, the unit's styrene monomer production capacity was 550,000 tons/year and propylene oxide production capacity was 250,000 tons/year.

3.Röhm

On June 30, Röhm America LLC announced that in order to cooperate with the scheduled opening of the LiMA factory in Gulf City, Texas, it will close its Westwego factory in Louisiana in June 2025.

The plant produces a variety of methacrylate products, which are building blocks used in a wide range of applications including coatings, plastics and construction. The decision to close the plant will affect approximately 70 employees.

4. LyondellBasell

On September 5, LyondellBasell announced the beginning of negotiations with regional unions to manage possible layoffs resulting from the closure of one of two polypropylene production units in Brindisi, Italy.

Among the two units, Spheripol has a production capacity of 260,000 tons/year and Spherizone has a production capacity of 235,000 tons/year. The company has yet to decide which of them will be closed and when. It is understood that one-third of Italy's polypropylene production capacity may be offline after the shutdown.

On December 1, according to the European Plastics News Network, LyondellBasell may continue its "internal cleanup work": the company will review the profitability of European factories, and management may ax factories with low profit margins.

5. LANXESS

In September, Lanxess provided more specific details on its announced cost-cutting plans, mentioning annual savings of 150 million euros in cost cuts and layoffs.

On October 18, Lanxess announced plans to lay off 870 people worldwide. It is reported that Lanxess will lay off 460 employees in Germany. The group has approximately 13,000 employees worldwide, and employees in Germany account for about half of the global employees.

6. Evonik

On September 26, according to the German Handelsblatt newspaper, Evonik is planning to completely restructure its global structure. In the future, Evonik will no longer stop at operating three large bases in Europe, but will further outsource its business to new service companies. The management team will also develop a new group management model. Thousands of employees may be affected by these plans.

7. Clariant

On December 6, Clariant announced the closure of its sunliquid® bioethanol manufacturing plant in Podli, Romania, and the reduction of related activities in the German biofuels and derivatives business line.

With the closure of the plant, Clariant will cut 120 jobs, while 50 jobs will also be cut at its biofuels and derivatives businesses in Straubing, Planegg and Munich in Germany.

8.Ingevity

On November 1, Ingevity announced further adjustments to its performance chemicals business, including the permanent closure of its factory facility in DeRidder, Louisiana, which produces a range of CTO-based products for the industrial specialty products business of Ingevity Performance Chemicals segment. (Crude tall oil, its downstream products are widely used in adhesives, synthetic rubber and other industries). Ingevity is taking more cost-cutting actions across the company, including layoffs.

9.TRINSEO

On October 30, TRINSEO decided to cease operations at its ethylstyrene styrene monomer (EBSM) manufacturing plant in Terneuzen, the Netherlands.

The decision was taken after the completion of joint negotiations with the Terneuzen works council. The factory has officially ceased operations in November 2023. With the closure of the EBSM plant, the company will purchase all styrene needs from third-party suppliers to support its downstream operations.

The company also recently announced the closure of its PMMA sheet operations in Bronderslev, Denmark, Belem, New Mexico, and Rho, Italy, as well as cost-saving measures including layoffs and other reductions. Materials produced at the closed PMMA sheet plant will now be produced at other plants within the global network, primarily Saint-Avolde, France, and Florence, Kentucky, USA.

Overall, these initiatives are expected to result in annual cost savings of approximately $75 million.

10.Mitsui Chemicals

On November 21, Mitsui Chemicals announced that it will close the polyethylene terephthalate (PET) plant at the Iwakuni Otake Plant in October 2024 (planned). The plant's PET production capacity is 145,000 tons/year.

Mitsui Chemicals began producing PET resin at its Otake Plant in Iwakuni in 1984, and its PET business has steadily expanded as domestic demand for PET bottles for beverages has grown. However, since 2013, the increase in imports of low-cost overseas products and the increase in demand for recycled PET bottles that do not require virgin resin have forced the company's PET plants to operate at low production capacity.

Therefore, Mitsui Chemicals believes that it is difficult to ensure profits by maintaining PET resin production in Japan.