For those wondering about the potential closure of the Leland DAK facility. It's simply economics. The Leland facility is only one of the 8 facilities DAK Americas owns. DAK originally purchased 3 Dupont facilities that were up for sale.
Keep in mind, DuPont scheduled the Leland plant was to be shut down in 2003. That's when DAK came in, slashed un-needed overhead costs and save 550 jobs. Yes, employees had to take some concessions but, they still have jobs, and the community vendors still had contracts. Over the last 3 years, DAK has invested over $1.3 billion in additional facility acquitisions, and over $26 million in the Leland facility. (to reduce variable manufacturing costs... ie, keep it market competitive)
Unfortunately, the 40+ year aged infrastructure requires massive investment over the next 5 years. When management weighs investing in the old -vs- purchasing other facilities with a smaller variable manufacturing cost... Well, it's a no-brainer.
There has been many attempts to reduce the costs at Leland however, some of the culture there simply believes they can spend-spend-spend.
In fairness to DAK, they are exploring every option to save part of te operations, even though it makes more economical sense to announce closure and hope another investor opts to purchase it.
Both Fibers and Resins is a tight market, and if your Monomers operations is not up to the Integrex level, it's hard to compete.
Hence, the reason they are investing elsewhere (regardless of the Leland closure decision)
Wouldn't you do the same?
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