Huntsman Corporation Considers Closing Redcar Chemical Plant Amid Soaring UK Energy Costs
US firm Huntsman Corporation is reportedly evaluating the closure of its Wilton International site in Redcar, Teesside, where approximately 100 employees work producing aniline, a versatile chemical used in various industries. The potential shutdown is attributed to escalating energy costs in the UK, which have made operations increasingly uncompetitive compared to overseas locations.
Impact on Local Employment and Manufacturing
The Redcar factory, one of the last surviving plants from the former ICI group and Huntsman's sole North East site, manufactures aniline. This chemical is essential for products ranging from car seats and textiles to agricultural chemicals, herbicides, photographic chemicals, and aircraft components. However, company executives have highlighted that sourcing basic raw materials in the UK can now cost up to seven times higher than abroad, exacerbating financial pressures.
Peter Huntsman, chairman and CEO of the family-led firm, who assumed control in 2000 after driving the acquisition of ICI's industrial chemicals business, stated that the recent surge in gas prices due to the Middle East conflict is proving to be "another nail in the coffin" for European industry. He emphasized that if current economic conditions persist for the next three months, the company would likely shut down the UK facility and import products from China or the United States instead.
Global Context and Previous Cost-Cutting Measures
Huntsman Corporation, headquartered in Texas, owns and operates over 60 plants across the US, Europe, Southeast Asia, and the Middle East. The company notes that its UK and European sites are particularly vulnerable to international gas markets, where prices have reached their highest levels since the onset of the Ukrainian conflict. Last year, the global business implemented a $100 million cost-cutting program, resulting in 600 job losses and the closure of seven sites in Europe.
Mr. Huntsman expressed disappointment, recalling that four years ago, the UK site was the lowest-cost aniline producer globally. He lamented, "We used to have more investment in the UK than we did in North America. It was a vital footprint to our company. And today we're down to one asset left there. I've laid off enough people in the UK that it is one of the greatest disappointments of my entire career."
Broader Implications for UK and European Industry
The situation underscores broader challenges facing UK and European manufacturing, with energy costs disproportionately impacting these regions compared to others like China, America, or the Middle East. Mr. Huntsman pointed out, "You're not seeing this in China, America or the Middle East, surprisingly, where the war is. You're seeing it in the EU and the UK, and they're being hit the hardest."
As the company monitors energy price trends over the coming months, the future of the Redcar plant remains uncertain, with potential significant implications for local employment and the regional economy.
