BOSTON (Jan. 29, 2009)—Cabot Corp., the world's largest carbon black producer, will close four plants worldwide and delay the start of new capacity in China in response to reduced demand from its major customer, the tire industry.
In addition, Cabot plans to mothball assets at two sites and implement short work time at another. It did not specify which plants or which product areas would be affected but said the actions will result in about 500 job cuts.
The company also has instituted hiring, travel and salary freezes, reduced capital spending plans by $50 million from fiscal 2008 levels, eliminated 300 contractor positions and reduced corporate costs.
Cabot expects the restructuring to yield more than $80 million in annual fixed costs in fiscal 2010.
Cabot disclosed its actions in its first quarter results, which showed the firm's carbon black business actually improved its operating earnings, to $22 million from $16 million, despite 2.7 percent lower sales of $399 million. Cabot attributed the gains to contract lag—high selling prices while raw materials costs were falling.
Cabot reported 29 percent lower demand for carbon black in all regions in the tire and automotive industries.
Cabot President and CEO Patrick Prevost called the business outlook “uncertain” but said the company's “robust” cash position gives the company “significant flexibility” to pursue its strategy.