Feb. 25 (Bloomberg) -- Styrolution Group GmbH is closing a polystyrene factory in the U.S. to reduce capacity of a low-margin commodity material, and expanding production of a specialty transparent plastic in Germany.
Closing the plant in Indian Orchard, Massachusetts, will cut polystyrene production by 150,000 tons, or 16 percent of the company’s total capacity in the Americas, and affect 58 jobs, the Frankfurt-based company said in a statement.
Styrolution, a joint venture of BASF SE and Ineos Group Holdings Ltd., is instead shifting its business toward higher-margin specialties and will start producing NAS, a strong, stiff plastic resin that is stable at high temperatures, in Ludwigshafen, Germany by the end of the third quarter, it said.
“NAS goes into more durable goods, like the water tanks in coffee machines,” Kevin McQuade, Styrolution’s head of Europe, Middle East and Africa, said in an interview. “Where we move toward durable plastics or medical applications, that’s going to be higher value for our customers and offers us better margin potential.”
Consumer trends are moving toward less and thinner packaging in North America and so polystyrene businesses have suffered as demand growth is practically flat, the manager said.
“It’s a very challenging market,” McQuade said. “We have lower capacity utilization in North America. This move allows us to control our costs by moving production to other polystyrene production assets in North America.”
NAS that was produced at Indian Orchard will be moved to Decatur, Alabama, Styrolution said. There the company will convert a general purpose polystyrene line into a flexible swing line to also produce NAS. The transfer will be completed by September, it said.
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