Lyondell to close units at Lake Charles chemical plant

By the OGJ Online Staff

HOUSTON, Sept. 19 -- Lyondell Chemical Co. Wednesday said it would restructure its toluene diisocyanates (TDI) business and the close its aliphatic diisocyanates (ADI) manufacturing units.

The moves include the layoffs of 10% of the workforce at its Lake Charles, La., facility by yearend. The site employs 600 people, including employees and contractors.

The Lake Charles ADI units with capacity of 18 million lb/year will be closed this year. Lyondell will continue to supply its customers into 2002, when it will exit the business. In the third quarter, Lyondell will take a pretax charge of $70 million related to the ADI shutdown.

Lyondell is the world's third largest TDI marketer with capacity in 2000 of 564 million lb/year. It is implementing proprietary Tolochimie technology for TDI in Pont de Claix, France, at a facility operated by Rhodia for Lyondell under a manufacturing agreement. Upon its completion, the Pont de Claix facility will be the largest TDI production unit in Europe.

It said the Tolochimie technology, to which Lyondell owns exclusive worldwide rights for TDI, provides higher yields, lower maintenance costs, and more cost-effective production. The company expects to replicate the technology at Lake Charles, a move that would expand TDI capacity there to 480 million lb/year. The site produced 286 million lb in 2000.

Ed Dineen, a Lyondell vice-president, said, "We are continuing to improve the value of our global TDI business. It is critical in this business that we constantly improve our cost structure. While margins are at record lows, we believe that the business fundamentals are sound. We see business starting to improve in the fourth quarter and believe this will continue into 2002."

ADI products include hexamethylene diisocyanate (HDI) and isophorone diisocyanate (IPDI), which are used in the manufacture of high-performance polyurethane coatings applications for industrial, automotive, and home appliance applications. TDI is used primarily to manufacture polyurethane foam for such products as bedding and furniture, as well as automobile seat cushions and instrument panels.

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