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Solvay to close two composite materials plants as aerospace crisis deepens

May 15, 2020
Chemical Value Chain

Solvay says that it will permanently close two composite materials plants as it accelerates restructuring measures to cope with lower customer demand due to the coronavirus disease 2019 (COVID-19) pandemic.

The composite materials business, which supplies Airbus and Boeing, will cease production at Manchester, UK, and Tulsa, Oklahoma.

In addition, job reductions are being implemented across the business and total headcount will likely fall by approximately 570 positions, or about 20% of the workforce. Activities at the two sites will be transferred to other facilities.

Solvay says the restructuring will enable the business to adapt its cost structures and partially mitigate the downturn in the near term. Implementation is expected to be largely complete by the end of 2020 and will result in annualized cost savings of approximately €60 million ($64.9 million). A restructuring charge of about €30 million will be taken against profits in the second quarter.

Solvay’s composite materials business has improved operational efficiencies in the past year by increasing productivity and advancing automation. Furthermore, a cost-reduction program was implemented in response to falling production of the Boeing 737 MAX, which was grounded following two crashes. These steps led to record results for the business in 2019 and sustained performance in the first quarter of 2020 but are not sufficient to overcome the significant headwinds from COVID-19, Solvay says. The current crisis has triggered an industry-wide reduction in expected demand from civil aircraft build rates for the near term, it says.

“The decision to part company with employees is never one that we take lightly. The steps we are taking are necessary to adapt to the dynamic environment and ensure that Solvay is competitive and strongly positioned to meet our customers’ needs as growth eventually resumes—which it will,” says Solvay CEO Ilham Kadri.

The move is a response to the downsizing now taking place in the civil aviation industry. As Airbus and Boeing prepare to slash jobs, the impact is being felt by their suppliers. Airbus is reportedly looking to cut up to 10,000 jobs soon, as it struggles with the fallout from COVID-19. Boeing is looking to cut approximately 15,000 jobs, 10% of its workforce.

By: Natasha Alperowicz

Source: Chemical Week

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