Dow, Croda to close Wilton facilities
20 Jul 2009
Wilton, UK - The North East’s process industries have suffered a series of severe blows with decisions by Dow Chemical Co. and Croda International to close plants on Teesside. There is also the looming threat of closure to the 170-employee Sanofi-Aventis pharmaceutical R&D plant in Alnwick, which is the only site of its kind in the North East of England.
Dow is to close its 55-employee ethylene oxide and glycol (EOEG) production facility at the Wilton International site on Teesside, with the loss of 50 jobs by the end of January 2010. The decision has prompted Croda International to close an adjacent cosmetics and personal care products facility, which used feedstock from the Dow plant. The Croda facility has 125 employees.
According to Dow, the Wilton EOEG plant was costly to run, while demand and profit margins for its products, particularly monoethylene glycol (MEG), had softened since early 2008. Moreover, it added, MEG economics have been significantly worsened by the global economic recession, further placing the Wilton site at a disadvantage.
The closure decision followed a review of potential options, including seeking a buyer for the site, Malcolm Wilson, site leader, Dow (Wilton) Ltd. Dow, he added, had also engaged with industry leaders, regional and government groups to find other alternative options, but none were identified.
“The decision to close the Dow Wilton EOEG site is extremely difficult. Dow Wilton employees have a global reputation for excellence in terms of teamwork plus safe and reliable operations” said Lee Christens, global business director Dow EOEG. “However, potential closure of the plant has become necessary, given the unsustainable business conditions the facility faces.”
According to Croda, Dow is the only company in the UK that currently produces EO, a raw material that it depends on to manufacture key products across its consumer care and industrial specialities markets. The company ruled out the option of importing EO as too complex and expensive, due to it being a hazardous substance and subject to strict regulation.
Instead, Croda has decided to move production to other sites within the group where EO is more easily accessible and continue to supply its global customer base in the normal way, said a company statement.
Croda's Wilton site was part of the Uniqema acquisition in 2006. The company has estimated the closure costs of around £13 million and an asset write off of around £5 million, while it expects to achieve annual savings of at least £5 million following the closure of the Teesside facility.
Wilton International , owned by SembCorp Utilities (UK) Limited, is one of few sites in Western Europe with special development status, designed for heavy industrial use such as chemicals and process plant. Over £2.5 billion has been invested in building or acquiring assets at the site of the past six years alone.
The strategic importance of the Wilton site is further highlighted by the following list of investments from Nepic:Ensus - Invested around £250 million on a biofuels plant. First announced in November 2006, the plant will be completed and operational later this year. Has sustained c.1,200 jobs during a 2 year construction. Will create around 100 permanent jobs and sustains a further 1,500 in the supply chain.
Yara - A £27-million investment in facility to take carbon dioxide from the Ensus plant and process it for the food and drinks industry.
Sembcorp Utilities UK - A £36 million investment in a new Gas Turbine/Heat Recovery Steam Generator to supply steam and electrical power to the Ensus plant.
SABIC UK Petrochemicals - £200-million investment in a low density polyethylene (LDPE) plant. The plant has created around 120 new jobs in a new market sector for the site, the previous polyethylene plant having closed in 2001. Will sustain around 750 jobs in other parts of SABIC including at the Wilton Cracker.
Sembcorp Utilities UK - £197 million investment in utilities and services on the site (includes purchase price, but excludes GT2 investment mentioned above) Investment in new assets includes building of new gas turbine (2004), four package boilers (2007) and a new biomass power station (2007) creating green energy at the site (plus a second GT mentioned above). The company has further expansion plans. These investments have made the site¹s utilities and services supply more secure and have played their part in encouraging other investment including an £8 million investment in wood recycling.
Artenius UK has invested around £40 million in investments at its T8 (£28-million uprate in 2004) and Melinar 5 plants (£12m uprate in 2002). The M5 plant was built in 1996 at a cost of £83 million.
