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Bayer to slash MDI production, impacting 320 employees

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LEVERKUSEN, Germany—Bayer MaterialScience A.G. will stop producing diphenylmethane diisocyanate at its plant in Belford Roxo, Brazil, in July because of high production costs at the site.

Its decision will cut about 55,000 metric tons of MDI per year from the market, a spokesman said. The MDI operation primarily serves Latin American customers.

Bayer also plans to halt production of polyether polyols at the facility—removing 15,000 metric tons from the market—and cut a small unit that makes raw materials for the coating industry. Those moves also are effective in July.

About 320 employees will be impacted by the closures, the spokesman said. Bayer is attempting to transfer many to its HealthCare and CropScience subgroups, which will continue to operate out of the Belford Roxo plant, he said.

The Leverkusen-headquartered company said it is working with local works councils and trade unions on severance packages for those workers not retained by the subgroups.

Bayer elected to discontinue MDI, polyether polyols and the raw material operations at the plant because internal analysis conducted in recent years showed the production at the Belford Roxo site was too costly when compared to other facilities and no longer competitive, a Bayer official in Germany said.

“This does not apply to the CropScience and HealthCare manufacturing at the site,” he said. “MaterialScience is working globally in a challenging market environment and continuously needs to look for efficiency improvements.”

The official noted that because Bayer is a global operation, deliveries of MDI, polyether polyols and raw materials can be made from several locations to Latin America to fill the void left by the cutbacks.

“Supply will be guaranteed, initially with the continuity of production, and with the establishment of logistics chains for importing products to adequately meet demand,” he said.

The Belford Roxo plant has been the only Bayer facility that produced MDI for the Latin America market.

Brazil is one of the company's five largest markets. The firm plans to continue making investments to widen its presence and activities, focusing principally on HealthCare and CropScience production, the official said.

Meanwhile, parent Bayer A.G. is proceeding with its planned spinoff of the MaterialScience group into a separate, publicly traded company by mid-2016. Decisions have been made on the legal and organizational structures of MaterialScience, the spokesman said, and important management positions filled.

It expects to complete the economic and legal separation of the business by Aug. 31. In the second half of 2015, Bayer will decide whether MaterialScience will be floated on the stock market through an IPO or a spinoff.