Engineering News

ACC Chief: Job Cuts May Be Over
February 06, 2009

The ailing U.S. chemical industry has likely hit its bottom and made all the production cuts and layoffs it will need to make in response to the global economic downturn, but some companies with heavy debts could still be tipped into bankruptcy, the head of the industry's main lobbying group said Thursday.

"Any company that is heavily leveraged in this market is going to be threatened," said Cal Dooley, president and chief executive officer of the American Chemistry Council, an Arlington, Va-based industry trade group.

While demand for chemical products has improved slightly in 2009, it is too early to tell if the "slight bump" in January is indicative of a larger rebound, Dooley said during a meeting with the Chronicle's editorial board. "We really need to get through March to tell if there is any market change."

In moves that have been felt in Texas, Dow Chemical, DuPont, BASF and other chemical makers slashed output at factories and cut thousands of jobs in late 2008 after a deepening recession wrecked sales of automobiles, houses and many other goods that contain chemical products.

But Dooley said the industry has already made most of the "adjustments" to staffing and production that are required.

In January, LyondellBasell Industries, the world's third largest chemical producer, placed its U.S. operations--including several manufacturing plants in the Houston area--in bankruptcy protection amid massive debts and falling sales. Deteriorating industry conditions also contributed to the Jan. 15 Chapter 11 filing by Oklahoma City-based Tronox.

Analysts have speculated other struggling chemical makerscould also forced to go the same route, but Dooley did not mention any companies by name.

"Right now, we're looking at one of the toughest financial environments this industry has ever faced," he said.

Separately, the trade group is lobbying Congress to include measures in the proposed economic stimulus package that could stoke demand for its products. Those include household energy efficiency incentives that could boost sales of items like solar panels and weatherized windows, which both rely on chemical products, and auto fuel economy improvements that could lead to increased use of plastics that make vehicles lighter.

Source: Houston Chronicle

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