Indorama Ventures’ purified terephthalic acid (PTA) production plant in Montreal East will close its doors in the coming months, resulting in the loss of some 140 jobs. A worrisome closure for other companies in the sector, according to Unifor.
The company, which specializes in the production of polyethylene terephthalate (PET), made the announcement on Tuesday, causing “shock” among unionized employees and their families, according to Unifor.
Indorama Ventures explained that the closure of the Montreal facilities is part of a strategic review of its portfolio, particularly with the optimization of assets.
The Bangkok, Thailand-based company said in a statement that there were “significant changes in the polyester industry.” It said that “new construction and continued overcapacity in China, much of which is integrated,” had “put pressure on Western producers.”
These cost pressures, combined with falling demand, the inflationary environment and high raw material costs, have led to low utilization rates and the closure of other plants in the region.
Excerpt from a press release from Indorama Ventures
The closure of the Montreal East plant is scheduled to begin in September and last for nearly a year. The majority of employees are expected to be laid off by the end of the year.
Indorama Ventures Chairman and Co-Head of PET Combined Business Unit Muthukumar Paramasivam said it is an “extremely difficult decision” [qui] was not taken lightly.”
“However, this is a necessary step to adapt to difficult market conditions,” he said.
PHOTO IVANOH DEMERS, LA PRESSE ARCHIVES
Indorama Ventures’ facilities in Montreal East, in 2017
“A very hard blow for the petrochemical industry”
According to the Unifor union, the news was greeted with “dismay” and “disappointment.”
“No one at our place saw this coming. There was no prior communication in the weeks leading up to any difficulties. For us, it was a flash in the blue sky,” said Unifor Quebec director Daniel Cloutier in an interview.
He says the union has not been informed that the company is conducting a strategic review. He wants to sit down with the company to better understand the decision and see if it is still possible to change the fate of the plant.
We are not unaware of the fact that there are mega-factories in the Asian market, that the biggest market for PTA is often in Asia, the North American market is perhaps less interesting.
Daniel Cloutier, Quebec director of Unifor
The union represents approximately 80 employees working as process technicians, laboratory technicians, instrument operators, mechanics, pipefitters and welders.
Unifor is looking forward to the establishment of a redeployment committee to assist its members. The employer is committed to providing professional support and proposing redeployment opportunities within its group where possible.
Other factories soon to be affected?
The union also wants to closely monitor the impact of the end of operations on surrounding companies linked to the Montreal East plant as suppliers or customers, namely Alpek and Parachem. Workers from these two companies are unionized with Unifor.
“I’m thinking of the Parachem factory, their exclusive customer is Indorama. We fear a negative impact. […] “It’s really a very hard blow for the petrochemical industry in eastern Montreal,” comments Mr. Cloutier.
Indorama Ventures says customers will not be affected due to its U.S. manufacturing and global presence. The company also says it will work with local suppliers to minimize the impact on their operations.
The Montreal East facility opened in the early 2000s, before being acquired by Indorama Ventures in 2015.