The Belgium-based corporate owner of Cytec Industrial Materials Inc. located in Tulsa is closing the plant, blaming lower customer demand from COVID-19. Cytec is a manufacturer of composite materials used in the manufacturer of planes for Boeing and Airbus.
The corporate owner, Solvay based in Brussels made the announcement indicating the Tulsa plant and one located in Manchester, United Kingdom will be closed, reducing global headcount by 570 workers or 20% of the corporate employment.
The company issued a WARN notice with the Oklahoma Office of Workforce Development.
Part of the blame also was reduced demand as Boeing encountered major problems with production of its Boeing 737 Max, which resulted in less work for Cytec.
Those activities will thereby be transferred to other best-in-class facilities, increasing capacity and improving operational efficiency, according to the company announcement.
These structural changes will enable the business to adapt its cost structures and to partially mitigate the downturn in the near term. The implementation of this plan is expected to be largely complete by the end of 2020 and will result in annualized cost savings of approximately €60 million. A restructuring charge of around €30 million will be taken in Q2.
Over the past year, Solvay’s Composite Materials business already improved operational efficiencies by increasing productivity and advancing automation. Furthermore, a cost-reduction program was implemented in response to the reduced production of Boeing 737 MAX. These steps led to record results in 2019 and sustained performance in the first quarter 2020, but are not sufficient to overcome the significant headwinds related to COVID-19. The current crisis has triggered an industry-wide reduction in expected demand in civil aircraft build rates for the near term.
“The decision to part company with employees is never one that we take lightly,” said CEO Ilham Kadri. “The steps we are taking are necessary to adapt to the dynamic environment and ensure that Solvay is competitive and strongly positioned to meet our customers’ needs as growth eventually resumes – which it will.”