21 March 2001 12:29 [Source: ICIS news]
LONDON (CNI)--German engineering group Babcock Borsig is to dissolve its chemicals contracting subsidiary Salzgitter Anlagenbau.
A spokesman for Babcock Borsig told CNI on Wednesday that it is closing Salzgitter, which it acquired two years ago from German tourism and logistics group Preussag, because it is non-core and is currently unprofitable.
He said Salzgitter will hold a core workforce until it has finished current projects.
A senior source in Salzgitter predicted that the company will close in about two years time. He confirmed that Salzgitter will honour its current contracts, the largest of which is basic engineering for a 300 000 tonne/year low density polyethylene (ldPE) unit in Iran. Salzgitter is also working on a ldPE project in Novyy Urengoy, Russia.
The Salzgitter source complained that Babcock Borsig has decided to close Salzgitter without any rescue plan. He said Salzgitter is investigating methods for rescuing as much of the company as possible. "Lots of parties are interested in parts of our know-how," he added.
Salzgitter currently employs about 220 people, compared with some 320 in 1997, according to the source. It recorded an unspecified loss for the year to 30 September 2000.
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