Soaring UK energy prices blamed for devastating proposal to close factory
THE American owners of Spondon factory Celanese Acetate today blamed soaring UK energy prices for their devastating plan to shut the plant with the loss of 460 jobs.
Celanese Corporation said it was consulting with staff over proposals to close the site next year to concentrate production in Belgium, the US and Mexico, where power costs were cheaper.
end of an era: A view of the works from land off Anglers Lane (above), an aerial shot of the site (far left), the factory entrance (middle left) and Spondon Railway Station with the Celanese factory in the background in January 1980 (left). Workers reacted with shock after hearing the news last night.
The move would bring to an end almost 100 years of acetate production at the factory and be the final death knell for an iconic city business which once employed 20,000 people.
Workers reacted with shock to the news last night.
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The company has employed generations of the same families and among those now set to lose their jobs are father and son Glenn and Chris Dono.
Glenn, 48, who has spent 26 years at the plant, said: "I just hope something can be done to save the site."
Officials at union Unite are seeking urgent talks with Celanese managers in a bid to persuade them to sell the factory as a going concern.
Over the past two years, the company has laid off staff and negotiated new contracts with suppliers of raw materials but was unable to save enough money on its energy consumption to keep the business alive.
Bob Walters, general manager of the global Celanese Acetate business, said: "The Spondon site has worked diligently for many years to improve its competitiveness and cost. Despite the best efforts of many dedicated employees and Celanese investments, the operating costs at Spondon remain the highest in Celanese Acetate.
"Moreover, shifts in geographic demand, anticipated industry consumption patterns and the site's high costs lead us to propose the cessation of manufacturing at Spondon.
"All affected employees will be treated fairly and respectfully throughout this process," said Mr Walters.
A spokesman for the Derby-based company said: "A lot of work was carried out to reduce costs but there was no way to make any inroads into reducing our fundamental energy costs, which are much higher in the UK than overseas.
"The biggest differential in costs between ourselves and other sites in the group is the price of energy," he said.
UK energy prices have skyrocketed by 16.7% in the last year against an average increase of just 3.8% in the European Union.
A large amount of heat and steam is used in the chemical process that turns wood pulp into acetate flake.
More steam is required in the production of cigarette filters, Celanese Acetate's core product.
There are fears the high cost of energy may also be hitting other firms.
George Cowcher, Derbyshire and Nottinghamshire Chamber of Commerce chief executive, said: "Our energy prices are substantially higher than in France, Germany and Belgium.
"I think it's a serious matter when we lose one of our major manufacturers and, when you lose a company of this calibre, it is a salutary lesson for us.
"Global companies operating here will put information about their sites into a spreadsheet and if the UK operation is the most expensive it will be the one that goes.
"The concern is that other multinationals will do the same," said Mr Cowcher.
A Department for Business spokesman said: "This is very disappointing news."
Conway Standing is the managing director of Derby-based commercial energy broker Utility Exchange Online.
He said: "Most of Britain's energy companies are owned by German, Spanish and French companies which have kept any increases lower in their home countries but allowed the prices in the UK to remain high."
"Research shows that, since last summer, wholesale energy costs have fallen by 40% but most of the big energy suppliers have failed to pass that on," said Mr Standing.
Jens Kurth, head of European communications and public affairs for Celanese, said demand for its products is expected to continue to shift to Asia, especially China, where new factories are being developed.
"Celanese expects to meet customer commitments under this proposal by optimising its global acetate production network, which includes facilities in Belgium, Virginia and Mexico, as well as the company's acetate joint venture facilities in China," said Mr Kurth.
According to Celanese Acetate, the factory will operate as normal until the end of this year.
Redundancy terms will be discussed with staff over the coming months.
Throughout 2011, the workforce will be reduced in stages, with the factory intended to stop production definitively in late 2011.
The majority of workers are expected to stay into late 2011 so any retraining and support for staff being made redundant would take place next year.