Ingevity streamlines performance chemicals for profitability
Ingevity Corporation has announced strategic actions to enhance the profitability of its Performance Chemicals segment. This initiative involves consolidating oleo-based chemical refining with crude tall oil refining at its North Charleston, South Carolina facility and closing its Crossett, Arkansas facility, in the United States, in August 2024.
The consolidation is expected to generate annual savings of USD20 million to USD25 million starting in 2025. The move simplifies Ingevity’s manufacturing footprint, allowing the company to focus resources and enhance operational efficiency. This decision is part of Ingevity’s broader plan to reposition its Performance Chemicals segment for sustained growth and profitability.
John Fortson, president and CEO of Ingevity, stated, “Transitioning oleo chemical refining to our North Charleston facility rationalises our manufacturing footprint, creates significant cost savings with no anticipated impact on commercial operations and maintains future growth optionality as the oleo chemicals market evolves.”
Financial and operational impact
In addition to the manufacturing consolidation, Ingevity is implementing corporate cost reduction measures that will yield an additional USD10 million in annual savings by 2025. However, these actions will incur charges of approximately USD100 million, with USD65 million being non-cash.
Rich White, senior vice president and president of Performance Chemicals, noted that the company’s North Charleston facility has demonstrated the capability to deliver the required chemistries to meet current and future customer demand. The facility will also allow for potential expansion at minimal cost.
“The pace of growth in our oleo markets has been impacted by a slow industrial recovery. We originally piloted oleo chemical refining at our North Charleston facility, and subsequent to our repositioning actions we have confirmed it has the capability to deliver both the oleo-based and crude tall oil-based chemistries we need to meet current customer demand as well as supply the new business we forecast to have over the next several years. The site also has the ability to expand capacity at nominal cost to meet additional market growth.”
Despite the challenges associated with closing the Crossett facility, Ingevity remains committed to supporting its employees and the local community throughout the transition.
