Omnova consolidates business, rejigs latex production

Beachwood, Ohio - Omnova Solutions, an Ohio-based speciality chemical company, has announced a plan to reduce annual operating expenses by $14-17 million (€12.5-€15.2 million) through cost-cutting and improving efficiencies of its manufacturing operations and SG&A (sales, general & administrative) activities.

The $14-17 million total includes $4 million of previously announced annual savings from the closure of emulsion polymer manufacturing at the company's Akron, Ohio plant, said an 11 June press release.

The measures are being taken to increase capacity utilisation and enhance the company's ability to offer cost-competitive products in both its performance chemicals and engineered surfaces business segments.

As part of the rejig, Omnova will close manufacturing operations in Calhoun, Georgia, which is one of the company's sites currently serving the North American carpet, paper and tire industries.

The company said that it would primarily move the production of the about 135 million wet pounds of styrene butadiene (SB) latex chemistries for carpet and paper to its Green Bay, Wisconsin facility.This, it said, is one of the most modern SB latex sites in North America.

Also, as part of the cost-cutting measures, vinyl pyridine (VP) latex currently produced in Calhoun for tire cord applications will be consolidated into other cost competitive sites.

Omnova said it will convert the Calhoun site into a distribution, quality control and technical service centre that will continue to serve the carpet industry and other regional customers.

In addition, the company will close around 130 million pounds of SB manufacturing capacity at its Mogadore, Ohio site. Mogadore, said the report, will continue to manufacture SB latices and other polymers, primarily for speciality applications, such as nonwovens, building and construction, tape and adhesives, and oil & gas exploration and production.

According to Omnova, the capacity reduction in Mogadore will position the plant for future growth opportunities in attractive speciality markets.

“With these changes, Omnova's North American chemical facilities will become market-aligned… and its total SB latex capacity utilisation will increase to more than 90 percent from approximately 62 percent today,” its report added.

"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, Omnova Solutions' chairman and CEO.

These actions, he said, represent a major step in putting performance chemicals segment “back on a track of generating improved returns, profitable growth and greater shareholder value.”

The closure of Calhoun manufacturing and the product and process transitions between sites will last through the middle of fiscal 2016.

Nearly 40 positions in Calhoun could be affected, while employment in Mogadore and Green Bay is expected to remain stable