Solvay to Close UK, US Composite Plants
Solvay has announced that its Composite Materials business will close plants in Manchester, UK, and Tulsa, Oklahoma, USA, because of lower customer demand due to Covid-19.
The Belgian company said the move, which will also see the loss of about 570 positions, equivalent to about 20% of its global workforce, is an acceleration of existing plans to improve efficiency and restructure its manufacturing footprint.
“The steps we are taking are necessary to adapt to the dynamic environment and ensure that Solvay is competitive and strongly positioned to meet our customers' needs as growth eventually resumes – which it will," said CEO Ilham Kadri.
The restructuring is expected to be largely complete by the end of this year and will result in annualized cost savings of approximately €60 million. Solvay will incur a restructuring charge of about €30 million in Q2.
The aviation industry has been disastrously affected by the pandemic, with the number of passengers plummeting and major airlines implementing or warning of major job losses.
Alexandre de Juniac, director general and CEO of the International Air Transport Association (IATA), described March as a disastrous month for aviation and said the situation deteriorated even more in April, with most signs pointing to a slow recovery.
Last month, the trade body forecast global passenger revenues to be down 55% in 2020 compared with 2019, a loss of $314 billion. “The industry is in free fall and we have not hit bottom,” said de Juniac.
Solvay said it has already improved operational efficiencies during the past year through increasing productivity and advancing automation, as well as implementing a cost-reduction program in response to reduced production of the Boeing 737 MAX aircraft.
While these measures led to record results in 2019 and sustained performance in the first quarter of 2020, Solvay said they were not sufficient to overcome the “significant headwinds” caused by the pandemic, which has triggered an industry-wide reduction in anticipated demand for civil aircraft build rates in the near term.