FocusSingapore’s petchem sector sees first layoffs amid downturn

23 February 2009 10:27  [Source: ICIS news]

By Chow Bee Lin

A worker in SingaporeSINGAPORE (ICIS news)--Singapore’s petrochemical sector is seeing its first job cuts in years after a period of tight labour markets, with some multinational companies rolling out their global layoff plans in the city-state, industry sources said on Monday.

Singapore is one of Asia’s major petrochemical hubs, with oil, petrochemical and chemical output estimated at around Singapore dollar (S$) 74.7bn ($48.8bn) in 2007, accounting for one-third of its total manufacturing output, according to the Singapore Chemical Industry Council.

US chemical major Dow Chemical confirmed that its global layoff plans had affected its operations in Singapore.

“The Dow Chemical Co announced last December an 11% reduction in [its] global workforce, and this has been similarly applied in Dow Singapore,” a Dow spokeswoman said.

She said the reduction had affected different job functions at Dow and staff had been informed, declining to reveal specific details.

Global acetyls producer Celanese was rumoured to have laid off some employees at its plant and commercial department in Singapore, sources close to the company said.

“We heard last week that some people from the plant and commercial side had been retrenched, but we don’t know how many (were affected),” one of the sources said, adding that there had been no problems in terms of the producer’s plant operations or deliveries.

Celanese had announced in mid-January that job cuts were in the pipeline due to the poor economic climate, but official comment could not be obtained for this article.

Celanese operates a 500,000 tonne/year acetic acid plant, a 200,000 tonne/year vinyl acetate monomer (VAM) plant and a 100,000 tonne/year acetate ester plant at its integrated acetyls production base on Jurong Island in Singapore.

However, not all petrochemical companies in Singapore are planning to scale down their workforce amid the downturn.

Global chemical majors ExxonMobil, Total and BASF said they were not planning redundancies at their operations in Singapore.

"There have been no recent retrenchments and none are planned at this time," an ExxonMobil spokesman said.

“In Singapore, BASF is actively managing our production according to market demands. Other measures that the company is taking include all ways to minimise discretionary expenses. Layoffs would only be considered as a very last resort,” a BASF spokesman said.

“Total has very strong reserves and because of that, we can withstand the downturn better than many others. There’ve been very minimal changes in the way we operate here,” a source at Total Petrochemicals said.

The Polyolefins Co (TPC), a major producer of polypropylene (PP), polyethylene (PE) and ethylene vinyl acetate (EVA), had not announced any layoff plans so far, according to company sources.

SABIC Innovative Plastics, which produces engineering plastics in Singapore, was not immediately available for comment.

In addition to layoffs, many companies in the chemical and petrochemical sectors in Singapore have frozen hiring activity amid the gloomy economic climate, industry sources said.

“All our clients from the oil, gas and chemicals sectors are not hiring and have not been hiring,” said Doreen Lee, an HR consultant with executive search firm McShayne Global Search.

“Hopefully, if the economy stabilises or turns around in the next three to six months, we could see layoffs being contained,” she said.

The government had introduced various schemes to encourage employers to leave retrenchment as a last resort but some analysts said they believed more needed to be done.

“Even though the government is offering some incentives, it still means you (the company) have to pay,” said Song Seng Wun, a regional economist with brokerage CIMB-GK.

Song was referring to the recently introduced government initiative to subsidise an individual employee’s monthly wages up to 12%, with a cap of S$2,500.

“It will help but it is not going to prevent companies from laying off more staff,” he said.

“Many firms have relatively little visibility on the orders front and demand situation at the moment. If firms have little visibility, you start to worry about cash flow and bottom line,” he said.

Singapore’s key industries, including electronics, precision engineering and chemicals, had been affected by the rapid fall in demand its key export markets, and its GDP growth was likely to be -0.5% to -2% this year, the Ministry of Trade and Industry (MITI) said in a recent statement.

The unemployment rate in Singapore averaged at 2.3% last year, up from 2.1% in the previous year, which was the first time the annual average rose since 2003, when it peaked at 4.0%, according to the Ministry of Manpower.

($1 = S$1.53)

Bohan Loh, Helen Lee, Prema Viswanathan, Cheong Su Yeen, Clive Ong and Desmond Chia contributed to this story

Read Paul Hodges’ Chemicals and the Economy blog
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By: Chow Bee Lin
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