The low production costs in emerging markets such as India and China have made it increasingly difficult for Europe-based facilities to compete. This has led some chemical companies, for example Lonza, Dow and DSM, to focus efforts on more complex products with higher margins.
In this environment businesses such as DSI, which produces intermediates for pharma, have suffered. DSI acknowledged the threat posed by competitors in emerging markets in 2007 when it closed a number of production plants and integrated the remaining facilities with other DSM sites.
This was intended to improve the fortunes of the company but it has found it to be “impossible to make DSI structurally profitable, even after these measures”. As a result, DSI will now close.
Production activities at the Chemelot industrial site in Sittard-Geleen, the Netherlands will stop on July 1 2010. DSI intends to discontinue all operational activities by December 31 2010, with product stocks being used to meet remaining supply obligations after the plant closes.
Closure of the Sittard-Geleen plant will affect 37 employees. DSI has stated it intends to find the affected employees alternative roles within DSM but if this proves impossible they will be declared redundant when their job ceases to exist.
To help ensure it avoids forced redundancies DSI has sought advice from the local works council. Staff made redundant as a result of the closure will be covered by the DSM LBV Supervision of Employment Plan as agreed with the trade unions at DSM Limburg BV.