Cabot to shut Indonesia carbon black plant

BOSTON (Nov. 23, 2015) — Cabot Corp. is closing its carbon black plant in Merak, Indonesia, with operations set to cease by the end of January 2016, the company said in a Nov. 12 release.

The shutdown will affect about 50 local employees and was driven by the Merak facility's financial performance over the past few years.

“Despite efforts to be competitive, the facility has suffered from low utilization rates,” the firm's release said.

According to Cabot, the move is part of a wider restructuring plan to consolidate the company's manufacturing footprint in Asia-Pacific.

The goal is “to ensure that we are operating as efficiently and effectively as possible to become more competitive in a challenging environment,” said Sean Keohane, president of the Reinforcement Materials segment.

“We will consolidate production in Asia by ceasing production at our Merak facility and using our Cilegon, Indonesia, as well as other Asian and global carbon black production sites to meet the regional demand,” he added.

However, Cabot stressed that Indonesia remained a strategic country for its carbon black business.

“Its tire manufacturing industry supplies growing local and global demand,” said Cabot, adding that it was engaging with customers on how to meet their needs during and after the shutdown.

The company expects the closure plan will result in a pre-tax charge to earnings of about $33 million but deliver annual savings of about $8 million.

Cabot announced earlier in October that it was cutting 300 jobs across its global operations in a bid to save $50 million in its 2016 fiscal year.

This report appeared on the website of European Rubber Journal, a United Kingdom-based sister publication of Tire Business.