Cabot to close carbon black plant in Indonesia

Cabot Corporation is closing its carbon black manufacturing facility in Merak, Indonesia by end of January 2016, the company announced.  

The decision is part of the company's move to consolidate manufacturing across Asia Pacific, a critical step  to ensure efficient operation and hasten future growth.  “To be successful over the long term, we must continue to focus on improving profitability through cost savings and increased operational efficiency while also producing the highest quality products that meet our customers’ needs,” according to Sean Keohane, President, Reinforcement Materials Segment.  

The closure will affect about 50 local employees. Despite efforts to be competitive, the Merak facility has suffered from low utilization rates. As Asia becomes a regional market for carbon black, the company opted to cease production at its Merak facility and use its Cilegon, Indonesia as well as other Asian and global carbon black production sites to meet the regional demand.

Cabot expects the closure plan to  result in a pre-tax charge to earnings of approximately $33 million, of which approximately $8 million of this amount is cash and $25 million is a non-cash charge. Annual savings related to the closure are estimated to be approximately $8 million, of which approximately $5 million is cash.