Tuesday, December 18, 2012

Courtaulds splits fibres & chemicals from paints (1998)

450 redundancies in R&D at Coventry and Spondon.  A rare quote from Andy Hopkins (now sadly deceased) who, as the Cellulosics Technology Director, was speaking for the "hardest hit R&D Department in Coventry which is losing 100 jobs"
  • Tencel will suffer but not as much as viscose.
  • Courtaulds swaps OPP film for Hoechst's shares in European Viscose.
  • The polymers business is put up for sale.
  • The demerger creates a successful paints/sealants business and a struggling Fibres and Chemicals business.
Courtaulds is to de-merge its coatings operation into a separate business, International Coatings, leaving its hard-pressed fibres and chemicals division to sink or swim on its own. In the meantime, it is looking for a buyer for its polymers business - expected to raise more than £200m ($320m). The fibres and chemicals operation, which will retain the Courtaulds name, faces a heavily oversupplied market, increasing price competition from Asia, rock-bottom polyester prices, and a strong pound. It has been approaching rivals with proposals for joint ventures and mutual cuts in capacity but the industry - composed of much smaller companies - is wary of Courtaulds' size.

A de-merged fibres business would be a less daunting joint venture partner. Chief executive Gordon Campbell said: 'As a self-standing business it will be better placed to explore options which will facilitate the rationalisation of the fibres industry.'Simultaneously, the company announced a total of 500 job losses in the UK at its Coventry and Derby plants, aimed at saving £15m annually. Hardest hit is the research and technology department in Coventry, which is losing 100 jobs. Andy Hopkins, celluloids technology director, said: 'We

will have to reduce both breadth and depth of fibres research temporarily, as a direct consequence of the difficult business position in fibres.'Development of the new synthetic fibre Tencel will be affected: 'Tencel development will not be totally unscathed, though it will not be cut to anything like the extent faced by other viscose areas,' said Hopkins. The other 150 redundancies at Coventry are mostly in the engineering division and in performance composites. Another 200 are to be lost in Spondon, near Derby.

Courtaulds also announced it has agreed a swap deal to end its two joint ventures with Hoechst. Courtaulds will relinquish to Hoechst its 27% residual holding in its OPP film joint venture. In return, Hoechst will pay the UK company £16m in cash and will hand over its minority holding in European Fibres.

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