Celanese closing German nylon unit to ‘optimize' costs

Celanese Corp. is closing its nylon 6/6 and high-performance nylon resin units in Uentrop, Germany.

In an Oct. 31 SEC filing, officials with Celanese in Dallas said that the closing was being done "to help optimize our production costs across our global network."

They added that the closing is subject to consultation with the works council and union representatives at the facility. That process started on Oct. 31. The closing is expected to cut 170 jobs.

Celanese expects the closure to be completed in 2024. As a result, the firm expects to record expenses, excluding employee termination costs, of $110 million to $125 million and $35 million to $40 million of other facility-related shutdown cash costs.

Celanese acquired the nylon 6/6 and HPN polymerization units in Uentrop as part of the DuPont Mobility & Materials acquisition in November 2022. In a news release, Celanese officials said that the intent to close "is a result of careful assessment and evaluation of these units in context of the global [nylon 6/6] and HPN production network Celanese acquired."

They added that polymerization costs at Uentrop are the highest in the Celanese global nylon 6/6 and HPN networks because of energy and raw material costs in the region. As a result, the impacted units have been operating at lower utilization rates as Celanese optimizes production costs across its global network.

The company plans to end nylon 6/6 operations at Uentrop by Jan. 1 and HPN polymerization by Feb. 1 and will work closely with customers to ensure a smooth transition, officials said. Celanese will continue to supply customers with Zytel-brand nylon 6/6 from manufacturing sites in Singapore; Richmond, Va.; and Washington, W. Va. Celanese will continue nylon compounding work at Uentrop.

"The company deeply regrets the impact this proposal may have on employees and the local community," officials said. "Today's action is not a reflection of the quality of work performed by Uentrop employees, the ongoing work performed by our employees at other regional sites or the efforts by Celanese employees to support the ongoing operations of our regional facilities."

Celanese is working to integrate the bulk of the DuPont business that it acquired in an $11 billion all-cash deal. The acquired business had annual sales of about $3.5 billion. The deal included Zytel and Rynite nylon, Crastin PBT, and Vamac and Hytrel elastomers, as well as other materials.

The DuPont deal included 29 global manufacturing sites and an intellectual property portfolio of about 850 patents. The acquired business employs around 5,000 in manufacturing, technical and commercial roles.

In the second quarter of 2023, Celanese reported sales of $2.8 billion, up 12 percent vs. the same quarter in 2022, but the firm's profit fell 22 percent to $335 million. Operating profit at its Engineered Materials unit—including the DuPont business—was down 5 percent to $158 million.

On Wall Street, Celanese's per-share stock price began 2023 at $116.60, but was at $113 in early trading Nov. 2, down 3 percent so far for the year.