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Chemicals group Arkema says to slash production worldwide

‘Over the end of the year, Arkema is adapting its production to the current level of demand with temporary shutdown or reduction of production at around 40 sites worldwide,’ it said in a statement.

Arkema-France’s top chemicals producer-employs 15,200 people in more than 40 countries, reporting annual sales of 5.7 billion euros. It said most of the cuts would affect sites in Europe and North America.

Arkema said it had been hard hit since the end of November by cancellations from clients in the car and construction industries, among the major victims of the rapidly deterioring global economic climate.

The group said sales of several plastics and acrylics, including textiles used for car fittings, had ‘declined significantly.’

‘The unprecedented situation is affecting Arkema’s financial performance despite the good resistance of several businesses,’ it said.

Fourth-quarter sales were expected to fall 15 percent year on year, although it predicted a margin of earnings before interest, taxes, depreciation and amortisation of around nine percent for 2008, similar to last year.

In addition to the production cuts, the company said it was accelerating the roll-out of a cost cutting programme aimed at saving 500 million euros between 2005 and 2010, including more than 330 million euros by the end of 2008.

The global chemicals sector has been hard hit by the global economic downturn, suffering the knock-on effects of the crisis gripping the auto and contruction sectors.

Netherlands-based chemicals company DSM also said on Monday it was cutting some 1,000 jobs, as it lowered its 2008 profit forecast by about 100 million euros.

Arkema’s French rival Rhodia this month extended production cuts to up to 56 of its 68 global sites.

The world’s biggest chemical company, Germany’s BASF, last month unveiled global output cuts and suspended operations at 80 plants, while Belgium’s Umicore, Norway’s Yara International, Germany’s K+S and the Malaysian state energy firm Petronas have all taken similar steps.

In the United States, meanwhile, the Dow Chemical Company is to cut 11,000 jobs and close 20 facilities, while Dupont has announced plans to slash 2,500 jobs to cope with the dire economic times.