Every week, there seems to be another
announcement about a chemical plant in
the U.S. being shuttered.
Many of the largest chemical companies,
from Dow to DuPont to LyondellBasell,
ceased production at several of their U.S.
plants last year and laid off thousands of
workers. Some of these plants, like DuPont’s
Hypalon facility in Beaumont, Texas, which
produced chlorosulfonated polyethylene
(CSPE) elastomer, were the only one of their
kind in the U.S. (C&EN, Sept. 21, page 21).
The U.S. chemicals industry has been struggling
in recent years due to excess capacity,
rising natural gas prices and declining demand
for certain chemicals. The recession is
just the latest blow to the industry.
Meanwhile, chemical production
is moving overseas to Asia and the
Middle East.
“I think we’re at the end of a
golden era,” says Roger Shamel,
President of Consulting Resource
Corporation, in Lexington, MA,
who consults with the chemical industry
on plant closures. “The days
when the U.S. had heavy growth
and was a key supplier to different
parts of the world for key chemicals are
coming to an end.”
Hundreds of chemical plants in the U.S. are
now sitting idle, and the process begins to
determine the fate of each one. Entire industries,
from used chemical equipment dealers
to dismantlement and demolition companies,
depend on plant closures for business, and in
good times it can be lucrative. But with the
recession, even these industries are hurting.
A plant closure is just the beginning of a
series of decisions that need to be made,
including cleaning up the site, selling the
equipment and turning the scrap metal into
money. Most of the large chemical companies
have an investment recovery group that
handles everything from redeploying and
selling used equipment to working with demolition
companies to level the plant. “These
activities can contribute generously to
a company’s bottom line,” says Jane Male,
Executive Director of the Investment Recovery
Association, a professional organization
for managers of surplus assets.
Todd Wodzinski, Dow Global Investment
Recovery Manager, who oversees the investment
recovery activities at the company’s
more than 150 sites worldwide, points out
that Dow’s investment recovery efforts net
the company between $40 and $80 million
a year. “That’s not a small number,” he says.
“It can be quite significant.” Still, investment
recovery activities remain largely obscure to
the general workforce. “A lot of employees
don’t even know we’re here,” says Wodzinski.
“You don’t really think about what happens
to a lot of this stuff after the end of life.”
One of the first steps in a plant closure, after
production ceases and employees move
on, is decommissioning and decontamination,
which involves cleaning up the site
and removing any hazardous materials that
can harm the environment. Any remaining
chemicals are disposed of, the electricity is
turned off, and the site is mothballed until it
can be dismantled and demolished.
If an investment recovery group can’t redeploy
the equipment to another site or sell it
itself, it will accept bids from used equipment
dealers for either individual pieces of equipment
or sometimes the entire plant. “A lot of
times, these plants and equipment still have
quite a bit of life left, and especially today
when everyone is trying to watch money and
the trend is to be environmentally friendly,
it makes sense to look at used equipment,”
says Jesse Spector, Vice President of surplus
equipment dealer Phoenix Equipment.
Gregg Epstein, President of used process
equipment dealer Perry Videx, says he’s seen
a trend toward some of the largest companies
buying used equipment. “It’s becoming
attractive to the big companies you wouldn’t
typically think of as being buyers of used
equipment,” he says.
Huge warehouses are needed to store the
equipment. “Right now, we have more than
15,000 pieces of used chemical processing
equipment in stock and ready to ship,” says
the website for Federal Equipment, which
buys and sells used chemical processing
equipment. The company says it occupies
more than 400,000 square feet of covered
warehouse space on more than 30 acres in
Cleveland, Ohio.
Companies like LabX, which manages
an online classified ad site for
used scientific equipment, also want
a piece of the pie. The company
frequently works with investment
recovery groups to list their equipment
for a percentage of the sale.
Some companies are in the sole
business of collecting and selling
information on plant closures to
alert companies like Perry Videx and
Phoenix Equipment of potential purchases.
Plant Closing News, an independently
owned operation based in The Woodlands,
Texas, charges nearly $1,000 for a yearlong
subscription to its twice-a-month
newsletter, which details current industrial
and manufacturing plant closures in the U.S.
and Canada. Chicago-based BuildCentral is
another such company that provides market
research on plant closings.
On occasion, a plant will get auctioned off.
In March, for example, an ArrMaz Custom
Chemicals plant in Seabrook, S.C., that
produced an anti-caking coating for ammonium
nitrate fertilizer was auctioned off by
Higgenbotham Auctioneers International.
John Haney, General Manager of Higgenbotham
Auctioneers International, says his firm
doesn’t see chemical plants often, but it has

auctioned off a few each year.
Even though there is a surplus of used equipment
out there, companies have to be more
careful about their investments, because in
this weak economy, there is less demand for
equipment. In fact, used equipment dealers
are hurting as much as the chemical companies
they are dealing with. “Companies are
in a holding pattern; they’re not buying anything,
whether it’s new or used,” says Spector.
“Inventories are building up in the industry,
that’s for sure.”
Even companies in Asia and the Middle
East aren’t buying as much as they used to.
“Maybe two years ago, they would have been
able to do a plant relocation project or an
expansion on their facility, and now they
just don’t have either access to funds or the
appetite to take on a project,” says Spector.
“I’ve been doing this for almost 30 years, and
it’s the worst that I’ve seen,” says Ed Bianco of
dismantlement and demolition firm Pioneer
Maintenance & Erectors. “We’re not doing
that much work right now; the economy
has hit us like everyone else.”
Emerging markets are a growing percentage
of Bianco’s overall business. He points out
that from 1984 to 1998, roughly 90% of his
business was domestic. “Now, I would say
that percentage is probably 40% of our business,
and 60% is shipping equipment overseas,”
he says. He recently disassembled two
methanol plants in Louisiana and shipped
them to Pakistan to be reassembled in their
original form.
Buyers in developing countries are getting
pickier about their investments, says Perry
Videx’s Epstein. “They’re not willing to take
anybody’s junk anymore even though they
used to be,” he says. “They want to buy more
modern equipment, newer equipment and
equipment that was better maintained.”
It generally takes 18 months from the time
a company shuts down a plant to when it’s
mothballed and ready to take apart, says
Wodzinski, but it’s the price of scrap metal
that often dictates when a demolition project
begins. “In years past, where we had this
huge runup in scrap metal prices, we were
doing a lot more demolition work because
all these projects were cash positive,” he says.
“We were actually making money to tear
things down.” Wodzinski says that Dow did
a lot of demolition work in 2006 and 2007
when scrap metal prices were high.
If scrap metal prices are low, like they are
currently, plants will sit idle. “It could sit for
a day, it could sit for a decade, it could sit for
50 years,” says Wodzinski. “It just depends
on when the company wants to spend the
money to go ahead and turn the site back
into a greenfield or a brownfield.”
Amid all this uncertainty, one thing is for
sure: There’s no sign that chemical plant
closures in the U.S. will let up anytime soon.
So plants will continue to sit idle, just watching
and waiting.