COMMENT
Painful necessities
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France is in uproar, burning tires and chopped trees are blocking the gates of the plant in Lavera, one of the seven sites affected by the insolvency declared by Kem One on 27 April (see Plasteurope.com of 28.03.2013) – and formerly part of Arkema.
The current situation seems strangely familiar. Just a few years ago, Italy was rocked by the news that its state-funded PVC production was going down the drain. Although France certainly is no Italy, the country’s unions are extremely powerful. The constant game of passing the bucket, as Klesch and Arkema each try to pass the loss-making business in need of significant investments to each other, does resemble the ping pong game once played by Ineos Vinyls and Eni. Meanwhile, the French public is furious.
It is extremely difficult to fathom that after a detailed look at the books, an experienced businessman and turnaround investor the likes of Gary Klesch did not know about the earnings power of the affected PVC and chlorine plants. Wouldn’t it be naïve to think the symbolic selling price of one euro meant that this time, he didn’t look that closely? Or for that matter that Arkema’s management did not think long and hard about how it could best rid itself of the loss-making units?
Even if one discounts the idled plants of Romania’s ailing Oltchim, the European PVC market suffers from a capacity surplus of some 1m t/y. What’s more, after years of erecting ever new plants, China’s PVC output is overflowing, too. And now the shale gas boom in the US has also birthed plans for new facilities.
Conspiracy theorists would call the recent developments a “pre-arranged game”: Arkema sells its PVC business, and adds a couple of million euros to make the deal palatable. Klesch willingly accepts – even though both parties know that the Swiss group actually is only interested in the downstream activities. Arkema feigns innocence, and – following a short eight-month reprieve – the loss-making business files for insolvency. The two parties then engage in mudslinging about who is to pay for the compensation, reach an agreement, express their regret for the employees, and return to business as usual. The only question that remains is: What will the French state say about another 1,300 unemployed?
Sven Arnold
The current situation seems strangely familiar. Just a few years ago, Italy was rocked by the news that its state-funded PVC production was going down the drain. Although France certainly is no Italy, the country’s unions are extremely powerful. The constant game of passing the bucket, as Klesch and Arkema each try to pass the loss-making business in need of significant investments to each other, does resemble the ping pong game once played by Ineos Vinyls and Eni. Meanwhile, the French public is furious.
It is extremely difficult to fathom that after a detailed look at the books, an experienced businessman and turnaround investor the likes of Gary Klesch did not know about the earnings power of the affected PVC and chlorine plants. Wouldn’t it be naïve to think the symbolic selling price of one euro meant that this time, he didn’t look that closely? Or for that matter that Arkema’s management did not think long and hard about how it could best rid itself of the loss-making units?
Even if one discounts the idled plants of Romania’s ailing Oltchim, the European PVC market suffers from a capacity surplus of some 1m t/y. What’s more, after years of erecting ever new plants, China’s PVC output is overflowing, too. And now the shale gas boom in the US has also birthed plans for new facilities.
Conspiracy theorists would call the recent developments a “pre-arranged game”: Arkema sells its PVC business, and adds a couple of million euros to make the deal palatable. Klesch willingly accepts – even though both parties know that the Swiss group actually is only interested in the downstream activities. Arkema feigns innocence, and – following a short eight-month reprieve – the loss-making business files for insolvency. The two parties then engage in mudslinging about who is to pay for the compensation, reach an agreement, express their regret for the employees, and return to business as usual. The only question that remains is: What will the French state say about another 1,300 unemployed?
Sven Arnold
02.04.2013 Plasteurope.com [224972-0]
Published on 02.04.2013