Cabot to close carbon black plant in West Virginia
Tue Jun 12, 2007 11:05am ET
NEW YORK, June 12 (Reuters) - Specialty chemicals maker Cabot Corp. said on Tuesday it plans to close its carbon black manufacturing facility in West Virginia, due to a slowdown in North American tire manufacturing operations.
The North American tire manufacturing market has shrunk over the last 18 months, with production moving overseas to facilities in China, South America and South East Asia.
This in turn has had an adverse impact on North American demand for carbon black, which is widely used as a pigment and reinforcing agent for automobile tires.
Cabot expects to take a pretax charge of about $22 million over the next two years, in relation with the plant closure. About $8 million of the charges will be recorded during fiscal-year 2007, said Cabot in a statement.
The Boston-based company said the charges include severance and employee benefit costs that cover 48 employees.
Cabot expects operations at its Waverly, West Virginia, facility to cease in March 2008, with customer shipments from the facility continuing through the middle of 2008.
The facility represents about 18 percent of Cabot's North American capacity and 5 percent of North American industry capacity, according to Jefferies & Co. analyst Laurence Alexander.
"We expect Cabot to invest in new carbon black capacity in both Asia and Latin America," said Alexander in a note to investors.
Shares of Cabot were down 30 cents to $47.31 in morning trade on the New York Stock Exchange.
Engineering News Archive