news of the week NOVE MBE R 24, 2008 E D I T E D BY W I L L I A M G. SC H U L Z & A L I C I A J. C H A M B E RS
DU PONT
AUTO WOES HIT CHEMICAL MAKERS
first 10 months of this year, General Motors’ domestic sales fell 20%, Ford’s dropped 18%, and MOTOR CITY CRISIS: Car Chrysler’s were production plummets, and off 26%. chemical demand follows Many chemical firms have already felt the auto industry slowdown. PPG plans ITING A “MASSIVE” DECLINE in global deto close an auto paint mand from automakers and other customers, facility in Clarkson, BASF, the world’s largest chemical firm, says Ontario, by midit is temporarily shutting down 80 plants worldwide. 2009 and eliminate Other major chemical companies are also feeling the pinch as the Detroit automakers General Motors, Ford, 150 jobs. Francebased Arkema, which and Chrysler seek government help to keep afloat. supplies polymers Chemical demand has plummeted since October, to automakers in BASF Chairman Jürgen Hambrecht says. Textile and Europe, has been hurt by the slowdown and pledges to construction customers have cut back orders, but “in keep production capacities in line with demand. Shell particular, customers in the automotive industry have admits to a slowdown in chemical demand from autocanceled orders at short notice.” The firm is also slashing production at an additional motive customers. International Specialty Products reports a drop in demand for styrene-butadiene rub100 plants worldwide at least through January 2009 ber used in tire production. and perhaps longer. Together, the cuts affect 20,000 “The U.S. auto industry needs reform,” says Fredemployees, and earnings will slip as BASF prepares for erick M. Peterson, president of consulting outfit Probe tough times, Hambrecht says. Economics. If one or more of the Detroit automakers BASF’s cuts, representing 25% of the firm’s indusgoes out of business, Peterson reasons, the chemical trial capacity, are “unprecedented in recent memory,” industry shouldn’t care. What says P. J. Juvekar, a stock matters, he says, is the total analyst at Citigroup. Cheminumber of cars produced— cal companies such as Dow and more is better. Chemical, PPG Industries, However, a Dow spokesDuPont, Celanese, and Huntsman says his firm fears for the man Corp. are also likely to long-term viability of the U.S. suffer from the auto industry’s auto industry. “In these unwoes, he says. DuPont acprecedented times, we believe knowledges that it gets 16% of it would be unwise to let this sales from the auto industry, vital part of the U.S. economy and Dow says it gets about fail,” he says. 10% of sales from the sector. Solutia, which gets 5% of T. Kevin Swift, chief sales from U.S. automakers, economist at the American supports a government bailout Chemistry Council, values the of the hard-pressed industry. chemical content of each light Hoses, belts, and plastic housings under a car A spokesman for the company vehicle made in the U.S. at acknowledges that automakers $2,664. That content includes hood are all chemical industry products. need to reform their business adhesives and sealants, coatjust as Solutia did in its own bankruptcy reorganizaings, fibers, plastic resins, rubber-processing chemition, from which it emerged earlier this year. But getcals, synthetic fluids, and synthetic rubber. ting private financing is next to impossible in today’s All told, U.S. automakers purchased $34.9 billion in credit market, he notes, and without government chemicals in 2007 to build 13.1 million light vehicles. money, bankruptcy could close down an automaker for As the number of vehicles made in the U.S. declines, good.—MARC REISCH chemical sales will fall too, Swift tells C&EN. For the I STO CK PHOTO
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A robotic arm sprays a DuPont finish.
