St. Louis, MO, January 26--Citing fierce competition overseas, Solutia said it will close its acrylic fibers business, cutting in half, to 250 people, its work force at an Alabama factory as the company presses to emerge from bankruptcy.
The St. Louis company said 200 contractors - most also connected to the plant in Decatur, Ala. - would be affected by the one-time Monsanto Co. spinoff's effort to shed money-losing operations.
Under the plan requiring approval by the U.S. Bankruptcy Court for the Southern District of New York, the Alabama factory will continue making chemical intermediates for use in nylon products but will close its acrylic fiber operation in April, Solutia said.
The matter is scheduled to be heard by the bankruptcy judge Feb. 17.
Jeffry Quinn, Solutia's president and chief executive, said the company's exodus from the acrylic fibers segment is among key facets of a reorganization to eliminate underperforming operations.
"Exiting the acrylic fiber business, which in recent years has been rendered unprofitable due to low-cost foreign competition, declining global demand trends and sustained high raw material prices, is our most recent step forward in implementing this strategy," he said.
Solutia spokesman Dan Jenkins said Solutia's acrylic fibers business has lost $1.5 million to $2 million a month since 1999 despite the company's cost-cutting efforts. Acrylic fibers are used in things such as upholstery and clothing.
"This is one of our steps, frankly, to recognize that it isn't a business it makes sense to be in any longer," Jenkins said.
In seeking Chapter 11 bankruptcy protection in December 2003, Solutia cited its struggles under heavy financial obligations when it was spun off by the former Monsanto as a separate company in 1997. Since then, Solutia was on the hook for retiree benefits, environmental and litigation costs accrued by Monsanto and Pharmacia over a century of manufacturing.
In 1999, Monsanto, also based here, was acquired by Pharmacia & Upjohn to create Pharmacia Corp., which in 2002 completed a spinoff of its biotechnology and agricultural businesses to form the current Monsanto (MON). Pharmacia was acquired by Pfizer Inc. (PFE) in April 2003.
Solutia had warned that bankruptcy was possible if it failed to shed debt, come up with cash for its pension fund and address legacy liabilities - litigation and settlement costs, environmental remediation, and retiree health-care obligations - costing the company about $100 million a year.
