LANXESS, a specialty Chemicals Company based in Germany, in a recent move has decided to consolidate its chrome value chain of its leather chemicals business by focusing on cutting-edge and service-intensive areas of leather production. The company announced in June, 2017 to make a paradigmatic shift by consolidating its international chrome value chain to South Africa. This will help the company enhance its competitiveness in the leather chemicals business.
Closure of Zárate Production Site Helps Company Focus on Organic Leather Chemicals
South Africa houses the company’s production facilities at Newcastle and Merebank, which are involved in processing chrome ore into intermediate sodium dichromates. These compounds are further converted to various chrome specialties such as tanning salts, which find extensive applications in tanneries worldwide. To this end, the company has announced to discontinue production at the Zárate site in Argentina in the Q4 of 2017.
The strategic measure will enhance competitiveness in the chrome chemicals business, and help the company focus on organic leather chemicals. The move will further enable it to consolidate its position by specializing in service-intensive areas for the leather production segment, stated Luis López-Remón, Head of the Leather Chemicals Business unit at LANXESS.
Positive EBITDA Impact
The streamlining of operations will have a positive effect on earnings before interest, tax, depreciation and amortization (EBITDA), which will help it to realize EUR 10 million annually by the end of 2018.
Closing down of the operation at the site closure in Zárate may affect 170 employees. LANXESS is in constant talks with several employee representatives to find sustainable solutions to address the issue. However, the company will continue its production sites in other cities of Argentina— Merlo and Burzaco. These productions sites are instrumental in providing products and comprehensive solutions for the rubber industry.