Leadership & People

Kemira Plans Capacity Cuts and Site Closures

Kemira says it will reduce capacity and close sites making polymers for paper chemicals under a new restructuring program designed to save an annualized €10 million ($13.4 million) during 2009 and 2010. This is in addition to a global cost savings program announced earlier this year, which will save more than €50 million/year and involves 1,000 job cuts, accounting for 20% of the group total, excluding the Tikkurila paints business.

Jyrki Maki-Kala, Kemira's CFO tells CW that the target is to permanently close some of the sites producing polymers for paper chemicals in North America and, to a lesser extent, in Asia. He declined to give specifics. Due to the cost savings program Kemira will book approximately €86 million in one-time items for the last quarter of 2008 of which less than half have cash impact during 2008 and 2009, the company says. About 55% of the items are related to cuts in production capacity, site closures and termination of unprofitable businesses, the company adds.

Kemira has already closed and will close further production capacity with low profitability in polymer and paper chemicals. Costs related to headcount reduction and organizational restructuring represent about 30% of the total. The company will centralize functional activities, which will account for approximately 15% of the cost. Both the savings and one-time items relate to the new Kemira business structure, excluding Tikkurila.

"We can say in hindsight that we started the cost savings program at the right time," says Harri Kerminen, president and CEO of Kemira. Business environment in the fourth quarter has been more ruthless than anticipated and visibility is shorter than ever before, he says.  

Source: Chemical Week