By Ross Dempsey, reporter
Perstorp, Sweden - Speciality chemicals supplier Perstorp recently took the decision to lay off 105 of its 1000 employees in Sweden as a result of falling demand for some of its products. Ceo Bo Dankis said, "Demand has fallen rapidly in recent months and nothing points to a quick improvement in the order intake.
"We have probably not hit the bottom of the recession yet," he commented in an 18 Nov statement. The company cited a global lack in demand in the automotive industry -- which is where many of the company's products will end up -- as a factor in falling demand.
Perstorp makes TDI (toluene diisocyanate), speciality isocyanates for coatings, caprolactones, speciality polyols and other polyurethane raw materials.
"Perstorp is, as all other companies are, affected by weaker demand and we have of course taken action to balance that situation, and that has been done in different ways," said Mats Persson, executive vice-president for Speciality Intermediates. "Of course we need to look into our cost structure and it's correct that we have been, and we are, in the process of reducing our workforce in Sweden… and the biggest decrease of manpower and cost savings will be in Sweden because this is our number one country, but we are taking some measurements in all our production units in all our organisations globally," he added.
The company did not give figures on global cutbacks in its workforce but did say it has a "mixed bag" of actions, depending on geographic location, to balance supply and demand. "We have taken measurements to reduce our output in order to balance supply and demand for different products at different production units… from some running flat out still to some units temporarily closed down due to demand and some plants running at reduced rates," Persson explained.
In pricing, Perstorp feels there should be "responsible management. ... We have decided to have a reasonable and responsible approach to avoid panic, support our business line profitability, and support our business and our customers," said Fabrice Garrigue, business manager for TDI, Chlorine and Derivatives.
Garrigue went on to say that demand will fall slightly in December, as this is a traditionally slow season for TDI. "For some other regions we would consider that there are some impacts coming from the credit crunch, which affect demand… whether this is temporary or long-term we don't know yet. But for sure there is a kind of impact in certain other regions, especially the Middle East and Africa." he added.
"We are really monitoring the situation closely day-by-day and take steps in order to have a balanced supply and demand for our products in order not to build an excessive inventory," commented Persson, adding that the company wants to have enough product to supply them.
Persson continued, "primarily for the chemical side we have seen a decline in demand. The question is how much is real loss in demand and how much is inventory reduction in the value chain… I think we are going to see the answer after the holidays."
He also said that Perstorp has seen the lead time from order entry to shipment "decrease significantly" over the last few months, meaning that customers are running down their inventory, "so when they order a product they need it immediately," he said. Persson said that because, for different reasons, no one wants to sit and inventory at the moment "we are facing a little bit of artificial lower demand."
The company said that customers are waiting until the last moment in the hope they might benefit from better prices, "which is not completely happening."
"Short-term I think that we tried to adapt ourselves and to look on a step-by-step basis, and this is basically what we have been doing for one month," said Garrigue. "With respect to next year, of course we don't know what is going happen in January, February and even for the rest of the year."
Garrigue added that the acquisition of Rhodia and Lyondell's TDI business was a step towards improving Perstorp's competitive position in the PU market. In addition Perstorp also acquired Solvay's caprolactones business at the beginning of the year.
• See more on the current supply and demand situation in the polyurethanes sector, and suppliers' predictions for the immediate future, in the next issue of Urethanes Technology International, and on the website at www.urethanestechnologyinternational.com
"
