Japan's Teijin to drastically restructure some plastics businesses
Hit by what it calls sharply deteriorating performance in recent months, diversified Japanese chemical firm Teijin Group said it wants to “drastically restructure” some plastics businesses, including PET film and fibres and polycarbonate resin.
By Steve Toloken, Plastics News
Posted 30 April 2009
Tokyo-based Teijin said it wanted to make a long-term shift away from those commodity materials, which now are 50% of sales, and seek to boost business with high-performance materials, pharmaceuticals, home health care and “green chemistry”.
It also said it was creating a senior management position for the so-called BRIC emerging markets in Brazil, Russia, India and China.
The restructuring plans come as Teijin said sales in its fiscal year ending March 31 are expected to fall 9 percent to 943.4 billion yen ($9.78 billion), with a loss of 43.3 billion yen ($450 million), as it said operating rates and demand in its materials businesses fell, and its traditional plastics businesses were among the hardest hit.
“In the poorly performing polyester fibres, PET film and polycarbonate resin businesses, we will restructure loss-making businesses and create an optimal global production configuration by reorganizing production facilities and lines,” Teijin said.
A Teijin spokeswoman said many details of any restructurings have not been decided, and the company could not go elaborate.
While those plastics businesses now account for 50% of Teijn sales, the company said it wants to shrink that to 25 percent by 2020 and grow its business in aramid fibres, carbon fibres and other advanced materials from the current 10% to 30% of sales.
It also said it wanted to put more focus on biomaterials, recycling systems and other green chemistry areas, and push developments of pharmaceuticals and home health care services, which currently account for about 15% of sales.
Teijin owns part of US-based bioplastics maker Natureworks, along with American agricultural products maker Cargill. Teijin said it would work on developing heat-resistant polylactic acid resin and other bioplastics made from inedible vegetation.
Teijin admitted it lagged in its response to the commoditization of the polycarbonate business, and said it was looking at moving PC production from Japan to facilities in Singapore and China to try to restore profitability to a sector where operating rates are at 70%.
In the PET film business, it said it was going to increase its focus in Asia, including in solar cell films, and could shut down loss-making US and European production lines.
In December, Teijin shut down a PET film plant in Circleville, Ohio, as part of its joint venture with US chemical firm DuPont. The Teijin spokeswoman declined to say if other cuts would be made, but said the company could switch production lines to higher demand products like thick films.
In polyester fibres, it said it would explore higher-performance and environmentally-friendly materials, and try to boost sales into the automotive interior market and set up specialty retail stores to sell private-label apparel.
Teijin also said it would freeze major capital investment for two years and cut capital spending this year by almost 50%. It also plans to eliminate 2,500 temporary and contractor jobs, with the sharpest cuts coming in its materials businesses.
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