HOUSTON, Sept. 19 /PRNewswire/ -- Lyondell Chemical Company (NYSE: LYO) today announced a restructuring of its toluene diisocyanates (TDI) business and the shutdown of its aliphatic diisocyanates (ADI) manufacturing units.
The moves include a 20 percent reduction of the workforce at Lyondell's Lake Charles, La., manufacturing facility by year's end. The site currently employs 600 people, including employees and contractors.
The Lake Charles ADI manufacturing units, which represent an annual capacity of 18 million pounds, will be shut down this year. Lyondell will continue to service its customers into 2002, when it will exit the business. In the third quarter 2001, Lyondell will take a pre-tax charge of approximately $70 million related to the ADI shutdown. On a cash basis, the company expects the impact to be neutral or slightly positive.
"We are working with our employees, customers and suppliers to minimize the impact of this decision," said Morris Gelb, Lyondell's executive vice president and chief operating officer.
Lyondell currently is the world's third largest TDI marketer with annual capacity in 2000 of 564 million pounds. The company is now 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.
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 ultimately to replicate this technology at Lake Charles, a move that would expand TDI capacity at the site to 480 million pounds annually. The site produced 286 million pounds in 2000.
"We are continuing to move forward with our plans to improve the value of our global TDI business," said Ed Dineen, Lyondell's senior vice president, Intermediates and Performance Chemicals. "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.
"These actions, combined with the efficiency and scale of our existing assets, our employees' expertise and our technology platform, provide us with a strong competitive position now and into the future."
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.
Lyondell Chemical Company, with headquarters in Houston, Texas, is the world's largest producer of propylene oxide (PO); the world's number three supplier of TDI (toluene diisocyanate); a leading producer of propylene glycol; a leading producer of other PO derivatives such as BDO (butanediol) and PGE (propylene glycol ether); and a producer of styrene monomer and MTBE as co-products of PO production.
Through its 41% interest in Equistar Chemicals, LP, Lyondell also is one of the largest producers of ethylene, propylene and polyethylene in North America and a leading producer of polypropylene, ethylene-oxide, ethylene glycol, high value-added specialty polymers and polymeric powder.
Through its 58.75% interest in LYONDELL-CITGO Refining LP, Lyondell is one of the largest refiners in the United States, processing extra heavy Venezuelan crude oil to produce gasoline, low sulfur diesel and jet fuel.
Lyondell is the third largest methanol producer in the U.S., through its 75% interest in Lyondell Methanol Company, L.P.
The statements in this release relating to matters that are not historical facts are forward-looking statements that are subject to risks and uncertainties. Actual results could differ materially, based on factors including, but not limited to, future global economic conditions, availability of capital markets, industry products capacity and operating rates, the supply/demand balance for Lyondell's and its joint ventures' products, competitive products and pricing pressures, further increases in raw material and/or energy costs, changes in governmental regulations and other risk factors. For more detailed information about the factors that could cause actual results to differ materially, please refer to Lyondell's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the Securities and Exchange Commission in March 2001, and Lyondell's Quarterly Report on Form 10-Q for the quarter ended June 30, 2001, filed in August 2001.
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