Sabic IP Cuts Engineering Plastics Output up to 20 Percent

The economic downturn will have a significant impact onthe supply of engineering plastics.

One of the industry leaders, Sabic InnovativePlastics, based in Pittsfield, MA said it will "reduceproduction 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 willcommunicate further details as appropriate with suppliers and customers tooptimize the supply chain and to minimize any disruption."

Sabic IP, formerly known as GE Plastics, is a major producerof polycarbonate, polycarbonate/ABS blends, modified polyphenylene oxide andother engineering materials. The company, which employs more than 10,500 in 25 countries,is a major supplier to North American automotive and building industries, whichare both significantly affected by the weak economy.

Product DevelopmentSlowdown?

It's not likely that design engineers will have troublefinding adequate supplies of engineering plastics, but there may be a reductionin new product development efforts, one of the hallmarks of the company fromits GE days. GE Plastics, for example, was one of the primary developers ofinjection-molded instrument panels for cars. The company played a big role inthe success of the Chevy Volt concept car, although some of the big ideas, suchas a hood injection-molded from recycled soda bottles, will not make it to theproduction 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 acautious financial statementon Oct. 29. Materials sales dropped 8.9 percent in the July-through-August periodat Bayer MaterialScience. Sales of polycarbonates fell by 2.8 percent afteradjusting for currency and portfolio effects. The thermoplastic polyurethanesbusiness unit saw business expand by an adjusted 2.9 percent.

Compared to the prior-year period, earnings were "greatlyhampered" by raw material and energy price increases. "Selling price increasesand cost savings from our restructuring program only partly offset theseeffects," said Management Board Chairman Werner Wenning.

On Oct. 21, DuPont reporteda third quarter operating loss for performance materials due to a specialhurricane charge. Excluding this charge, pre-tax operating income declined 36percent to $125 million due to weak markets, weather-related businessinterruptions and rising raw material costs that were not fully offset byhigher prices.