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Sabic IP Cuts Engineering Plastics Output up to 20 Percent
DuPont and Bayer also note worsening market conditions
Doug Smock, Contributing Editor -- Design News, November 10, 2008
The economic downturn will have a significant impact on the supply of engineering plastics.
One of the industry leaders, Sabic Innovative Plastics, based in Pittsfield, MA said it will "reduce production across its engineering thermoplastics portfolio by up to 20 percent, effective immediately." The announcement was made in Belgium Nov. 5.
The announcement continued: "Sabic Innovative Plastics will communicate further details as appropriate with suppliers and customers to optimize the supply chain and to minimize any disruption."
Sabic IP, formerly known as GE Plastics, is a major producer of polycarbonate, polycarbonate/ABS blends, modified polyphenylene oxide and other engineering materials. The company, which employs more than 10,500 in 25 countries, is a major supplier to North American automotive and building industries, which are both significantly affected by the weak economy.
Product Development Slowdown?
It's not likely that design engineers will have trouble finding adequate supplies of engineering plastics, but there may be a reduction in new product development efforts, one of the hallmarks of the company from its GE days. GE Plastics, for example, was one of the primary developers of injection-molded instrument panels for cars. The company played a big role in the success of the Chevy Volt concept car, although some of the big ideas, such as a hood injection-molded from recycled soda bottles, will not make it to the production model.
In 2007 Saudi Basic Industries of Riyadh, Saudi Arabia, acquired GE Plastics, which had posted sales of almost $7 billion in 2006.
Another major producer of engineering plastics issued a cautious financial statement on Oct. 29. Materials sales dropped 8.9 percent in the July-through-August period at Bayer MaterialScience. Sales of polycarbonates fell by 2.8 percent after adjusting for currency and portfolio effects. The thermoplastic polyurethanes business unit saw business expand by an adjusted 2.9 percent.
Compared to the prior-year period, earnings were "greatly hampered" by raw material and energy price increases. "Selling price increases and cost savings from our restructuring program only partly offset these effects," said Management Board Chairman Werner Wenning.
On Oct. 21, DuPont reported a third quarter operating loss for performance materials due to a special hurricane charge. Excluding this charge, pre-tax operating income declined 36 percent to $125 million due to weak markets, weather-related business interruptions and rising raw material costs that were not fully offset by higher prices.
