Significant Decline Seen In 2006 CPI Plant Closures

Athough 2006 plant closures declined 27 percent in 2006, closures are still outnumbering new plant startups, according to Industrial Info Resources report.

Although 52 Chemical Processing Industry (CPI) plants in the United States and Canada have closed so far this year and seven more plants are scheduled to close before the end of 2006, these numbers are only about 1 percent of the total operational CPI plants and represent a decline of almost 27 percent over 2005 CPI plant closures, according to research released Friday by Industrial Info Resources.

Even though the plant closures resulted in the loss of about 2,800 jobs in 2006, this was offset by the almost 900 new jobs created from 25 grassroot plant startups during the first ten months of the year. The seven other planned CPI plant closings for the remainder of 2006, that Industrial Info is tracking, could result in over 680 more jobs being eliminated.

Industrial Info's study points out that while plant closings are a natural part of growth due to plant owners eliminating outdated or inefficient technology or consolidating plants with similar products through acquisition or mergers, for many years the amount of plant closures each year has out numbered new plant startups.

Statistics show there are more than 60 CPI plants built before 1900 that are still in operation today, and another 640 or more that were built between 1900 and 1950.

Although the production and process technologies used in these facilities have had to have been updated many times over the past decades, there is a limit in most cases to the efficiencies that that can be gained with core infrastructure that was designed and installed 50 to 100 years ago, the research noted. 

In many cases, a plant closure means the complete dismantlement and demolition of plant assets including buildings and utilities making the plant site available again for brownfield construction 

Several CPI companies have been able to utilize closed plant locations and the existing physical assets to begin production of similar or related products.

As an example, Equa-Chlor, LLC , Longview, Wash., has combined the equipment of two previously closed plants to build a new 75,000-ton per year chlorine plant in Longview.

Harcros Chemicals, Inc., Kansas City, Kan., plans to spend several million dollars in 2007 to demolish a large part of a site it purchased from Vicksburg Chemical Co. in Vicksburg, Miss. Harcros began warehouse operations at the plant this week and will utilize some areas to produce custom blending products.

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