Engineering News

Worker flicks wrong switch, costs Nova $11 mln
Wed Jun 21, 2006 4:35pm ET

CALGARY, Alberta, June 21 (Reuters) - A worker accidentally tripping a shut-off switch at a major Ontario plastics plant will cost Nova Chemicals Corp. $11 million in lost profit, the company said on Wednesday, because it won't be able to fulfill some contracts because of the blunder.

A contractor's employee installing a structural steel platform at an ethylene plant in Corunna, Ontario, mistakenly activated a process shutdown switch on Monday afternoon, halting production and forcing two weeks of repairs at the facility.

"The switch is a safety thing so if anyone sees something going wrong they have the opportunity to shut down the plant," said Nova spokesman Greg Wilkinson. "But that's not what happened here. It was not a safety issue. It was simply inadvertent."

Because of the unexpected shutdown, Nova declared force majeure on shipments of propylene and some other products. Force majeure is a legal term that means a company can't fulfill contracts because of circumstances beyond its control. It will be lifted when the plant returns to normal operating rates and inventory levels.

The company said the outage and lost sales will shave profits by about $8 million in the second quarter and $3 million in the third. According to Reuters Knowledge, analysts, on average, had expected the company to earn $68.2 million in the second quarter.

Nova has launched an investigation into just how the worker hit the button, but the company said its priority is repairing the facility.

Nova's spokesman said later on Wednesday that the company has decided to await the results of its inquiry before making any decision on potential penalties. However Wilkinson said he has some sympathy for the worker.

"I can't imagine how that feels, but it has got to be very distressing," he said.

The Corunna plant is one of Canada's largest plastics facilities, capable of supplying up to 40 percent of the country's primary petrochemical market.

The plant processes crude oil, natural gas condensates and liquids into products like ethylene, propylene, benzene and toluene. Those are in turn used to make plastic resins for the manufacture of small appliances, plastic bottles, carpets, cosmetics and other items.

The facility, located near Sarnia, Ontario, 180 miles (290 kilometers) southwest of Toronto, employees about 1,000.

Shares of Nova, which is based in Calgary, Alberta, but maintains executive offices in Pittsburgh, Pennsylvania, fell 26 Canadian cents, or 0.85 percent, to C$30.30 on the Toronto Stock Exchange on Wednesday.

Source: Reuters

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