Omnova shuts SB latex production in Georgia, Ohio; cut 40 jobs

Omnova shuts SB latex production in Georgia, Ohio; to cut 40 jobs

8:09 AM, 12th June 2015
Omnova shuts SB latex production in Georgia, Ohio; to cut 40 jobs

BEACHWOOD, US: Omnova Solutions Inc said that it is shutting down styrene butadiene (SB) latex production at its facilities in Calhoun, GA and Mogadore, OH, as part of a cost-cutting program expected to save the company $14-17 million per year. The company is eliminating 265 million pounds per year of SB latex production between the two sites, and shifting all SB latex production to its Green Bay, WI facility.

The company said that the initiative will help it improve the SB latex capacity utilization to nearly 90 percent, up from 62 percent.

Omnova said nearly 40 positions in Calhoun could be cut, while employment in Mogadore and Green Bay is expected to remain stable.

“We regret the impact these actions and will provide assistance to help affected employees. Though difficult, we know this is a path we must take. The footprint redesign helps us meet our objective of cost effectively matching capacities and capabilities with current market conditions and future growth opportunities,” said Kevin McMullen, chairman and chief executive officer, Omnova.

It enhances our ability to meet the needs of our customers in the carpet, paper and specialty markets and puts the performance chemicals segment back on a track of generating improved returns, added McMullen.

The Mogadore plant will continue to make SB lattices, as well as polymers for nonwovens, construction, adhesives and oil and gas applications. The Calhoun facility will be converted to a distribution and technical service centre for carpet customers, and other customers in the US southeast.

Annual cost savings of $14-17 million also includes the previously announced closure of emulsion polymer manufacturing at Omnova’s Akron, OH site, as well as cuts in selling, general and administrative (SG&A) expenses. The company is targeting $4-5 million per year in SG&A cost cuts, along with $10-12 million per year in manufacturing cost cuts. The SB latex closures at Calhoun and Mogadore are expected to save $6-8 million per year, Omnova said.

The company expected total cost savings to reach $3 million during the second half of fiscal 2015, with the full $14-17 million per year in savings reached by fiscal 2017. It also expected to incur $16-20 million in cash and non-cash charges through fiscal 2016 as a result of the restructuring efforts, of which approximately $9-11 million will be cash, Omnova said.

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