Cabot Norit eliminates 40 positions from Marshall plant
Oct. 11, 2017 at 4 a.m.
Cabot Norit Americas Inc. announced Tuesday it is eliminating about 40 positions from its activated carbon plant in Marshall.
"Unfortunately, I'm letting about 40 positions go today," General Manager Gavin Barrack said on Tuesday. "It's a market driven issue. The (sales) volumes (of activated carbon) we expected to come through have not come through. To protect the 95 plus jobs that will remain onsite we have to take this action.
"We will be indefinitely idling three of our seven activation kilns," Barrack said. "We are taking capacity out of our network and out of the carbon market due to oversupply. We're not moth-balling it… but there is no intention in our foreseeable future (to) bring that capacity back online, hence the reduction in our head count."
The decision, Cabot released, was driven by the need to better match the business's production capacity and cost structure with the current demand for powdered activated carbon in North America. Demand for powdered activated carbon following the implementation of the Mercury and Air Toxics Standards (MATS) regulation has been lower than originally expected, resulting in overcapacity. MATS was promulgated in April 2012, but the compliance dates did not kick in until April 2015 and 2016.
"This decision will enable us to adapt to present market conditions in North America and realign our costs to current demand and pricing levels," said Sean Keohane, president and chief executive officer of the global specialty chemicals and performance materials company, headquartered in Boston, Massachusetts, in a release. "It is always important for us to ensure that our manufacturing network is operating optimally as we strive to balance the long-term health of our businesses with the evolving needs of our customers."
Barrack said his thoughts are with the departing staff.
"My concern today has been the staff who are leaving," Barrack said. "We have treated them with dignity and have severance packages where required and out place assistance. We've been working with the union to facilitate that today.
"I've been holding site briefs across the site to keep my employees advised. I want to make sure we come through this with respect, dignity, everyone is treated as such and, ultimately, that the plant is operated safely through this change," he said.
Cabot expects this action plan to result in a pre-tax charge, an expense or a cost that a company books that has not yet been tax effected, to earnings of about $9 million, of which less than $1 million is cash. Annual savings related to this action are estimated to be about $6 million, of which about $5 million is cash.
Cabot previously reduced their staff by 38 in October 2015, in response to a Supreme Court ruling. The company had been ramping up in anticipation of new federal clean air standards, opening a new coal mine near Marshall in November 2014 to provide lignite coal as the raw material for activated carbon and place itself in the position to supply enough of the filtering material for an expected quadrupling of demand by coal-fired utilities in coming years.
In June 2015, Cabot was forced to stall its plans, as the Supreme Court ruled the Environmental Protection Agency did not properly consider the costs of the first limits on mercury, arsenic and acid gases emitted by coal-fired power plants, known as mercury and air toxins. But with the Supreme Court upholding the decision in 2016, Norit hired back about 20 of its employees.