Performance chemicals company Ingevity Corp. will close its Crossett, Arkansas, facility and shift oleo production to North Charleston, South Carolina, a move the company hopes will make its performance chemicals segment more profitable.
The closure of Crossett is expected to generate annual savings of U.S.$20 million to $25 million starting in 2025. The company blames underperformance of its oleochemicals business on slow industrial recovery. Ingevity will also implement a number of corporate cost cutting measures that it says will generate $10 million in annual savings by 2025.
However, the restructuring will cost Ingevity $100 million, of which $65 million is non-cash asset-related charges, $10 million in severance pay and other employee-related costs, and $25 million for decommissioning, dismantling and removal charges and contract termination costs, the company said in a press statement.
“Transitioning oleo chemical refining to our North Charleston facility rationalizes our manufacturing footprint, creates significant cost savings with no anticipated impact on commercial operations and maintains future growth optionality as the oleochemicals market evolves,” said John Fortson, president and CEO of Ingevity.
The company saw second-quarter net sales fall 19% to $390.6 million year-on-year, as well as a net loss of $283.7 million in the same period.
The North Charleston plant processes crude tall oil.
Ingevity says it would support employees from the local community near Crossett who find themselves without work.
In July, Ingevity ended its crude tall oil purchase agreement with GP Pine Chemicals LLC after several years of partnership, citing a strategic realignment of its performance chemicals business. It also closed its Deridder, Louisiana, tall oil processing plant.