Posted on 10/08/2003 12:08:33 PM PDT by Willie Green
Great Lakes Chemical Corp. is closing three Polymer Additives plants and laying off 9 percent of its employees in an effort to reduce operating costs by as much as $30 million a year.
The Indianapolis-based company will lay off about 360 manufacturing workers at Polymer Additives plants in Tennessee, the United Kingdom and Toronto, and about 40 administrative employees globally, including a "handful" of administrators in Indiana.
Great Lakes, which has 4,600 employees worldwide, is negotiating with employees and unions to decide when the U.K. and Newport, Tenn., Polymer Additives plants will close and what severance packages might include.
The company is moving the U.K. Polymer Additives operations to El Dorado, Ark., where production will be cheaper, said Wendy Chance, Great Lakes manager of corporate communications. The packaging part of the Toronto plant will move to Georgia.
Great Lakes produces chemicals for water treatments, flame retardants, specialty household cleaners and other uses.
Consolidation will cost Great Lakes about $120 million, half of which will be recognized in the third quarter and the remainder by the third quarter of 2004. The company will realize savings from the cost-cutting moves by the beginning of next year.
Rising manufacturing costs and the weak economy are to blame for the cutbacks, Chance said.
Trimming down Polymer Additives will make Great Lakes' other divisions more profitable, said Dmitry Silversteyn, senior research analyst with Longbow Research in Ohio.
Profits for Polymer Additives have been down, from $52.4 million in 2000 to $16.4 million last year. Bans in Europe and an impending ban in California on one of the division's products, bromine-based flame retardant, could negatively affect future sales, Silversteyn said.
"Polymer Additives hasn't been a good business to be in since 2000," he said. The company needs to sell more and needs to sell its products at higher prices, he said.
Great Lakes had $18.9 million in net income in the second quarter, down from $105.9 million during the same period last year. Its second-quarter sales of $416.7 million were better than the $408.5 million it recorded in the year-ago period.
In trading Wednesday on the New York Stock Exchange, its stock dropped 34 cents to $20.81.
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