Sabic to cut 1,050 jobs in Europe, shut units
Riyadh, April 19, 2013
Saudi Basic Industries (Sabic), the world's biggest petrochemicals group, plans to cut about 1,050 jobs in Europe and close some operations because of a gloomy business outlook, the company said.
The company relies heavily on gas to power its plastics, fertiliser and chemicals businesses and is eyeing much cheaper supplies in the United States where a shale gas boom has cut prices to half European levels.
Shale gas has helped transform the U.S. economic outlook by luring gas-intensive industries like petrochemicals, while Asia shows greater demand growth prospects.
Sabic said lower consumer spending on houses, cars and appliances and less investment on infrastructure in Europe was cutting demand and squeezing margins.
"Competition has intensified from other regions, especially from the United States, which has the advantage of shale gas development, and Asia, which has increased local production capacity and consumption," Sabic said.
The company, which made a net profit of around $6.59 billion in 2012 and has 40,000 employees spread across 40 countries, did not identify which European businesses would close.
Two thirds of the job cuts will affect Sabic employees, with the other third made up of contract staff. Talks with trade unions over the restructuring plans have begun, it said.
Fears over possible redundancies hit production at one of Sabic's plants in the Netherlands in February.-Reuters