Corrected: LyondellBasell plans 14 site closures, 4,800 job cuts

14 April 2009 19:49  [Source: ICIS news]

Correction: In the ICIS news story headlined "LyondellBasell plans 14 plant closures, 4,800 job cuts " dated 14 April 2009, please read the headline as " LyondellBasell plans 14 site closures..." instead of " LyondellBasell plans 14 plant closures..."
Please read in the first paragraph ... sites ... instead of  ... plants .... Please read in the third paragraph ... sites .... instead of  ... plants ... and ... site ... instead of ... plant .... A corrected story follows.

HOUSTON (ICIS news)--LyondellBasell’s plan to lift its current cost savings by $700m (€525m) includes the closure of 14 sites and the elimination of 4,800 employees and contractors by the end of 2010, the company said in a conference call on Tuesday.

The conference call updated an earlier announcement, when the company had not specified an exact number of closings.

Through March, LyondellBasell said it has closed seven of the 14 sites while cutting approximately 2,200 jobs, leaving seven site closures and approximately 2,600 job cuts still to come. The company said it will eliminate 600 of those positions in the second quarter amid chemical and polymer margins that are falling below second-quarter expectations.

“We are acting aggressively,” chief operating officer Ed Dineen said. “March and April have not given indications of any significant change in market conditions.”

The only plant closure specifically cited by LyondellBasell during the call was its Chocolate Bayou olefins plant in Texas. But last week, a company spokeswoman said that the overall list included 4-5 plants in Texas, facilities in Maryland and Illinois, two in Canada and one in France.

The company said it is also targeting 25 office closures, with 13 completed as of the end of March. Moreover, it has already met its inventory reduction goal of 15%, with inventory off 17% in March from late-2008 levels.

LyondellBasell, which has 79 mostly US affiliates hoping to emerge from Chapter 11 bankruptcy protection, said that through the moves, it had reduced fixed labour costs to $300m/month in January and February, down from approximately $405m in mid 2008.

Between those fixed cost reductions and other production changes still to come, the company said its goal is to improve results by $1.3bn/year by the end of 2010, with “more than a substantial piece” of that figure reached in 2009.

“Although we expect improvement over the first quarter, we haven’t seen sufficient evidence that we will reach our second quarter expectations,” Dineen said. “So we have permanently shuttered capacity in olefins and polyolefins. None of this is easy, but it is necessary.”

Within the chemicals segment, Dineen said, overall volumes for olefins have sagged due to weak market conditions and reduced ethylene demand. The lone chemical exception is propylene oxide (PO), which has beaten expectations, the company said.

Within polymers, both polyethylene (PE) and polypropylene (PP) margins are significantly lagging 2008 results, the company said, with conditions in Europe somewhat worse than in the US. Dineen attributed the divide between US and Europe operations to Europe’s greater dependence on durable goods markets.

“Depressed demand from the durable goods sector continues to impact operating rates,” he said.

The company said it still forecasts gradual improvement in net income for the duration of 2009, but that traditional seasonal improvement usually evident by now has yet to occur.

($1 = €0.75)

For more on LyondellBasell visit ICIS company intelligence
For more on olefins and polyolefins visit ICIS chemical intelligence
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By: Ben DuBose
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