Cabot plans service centre in Latvia

ERJ staff report (RN)

Boston – Cabot Corp. plans to open a new Europe, Middle East and Africa (EMEA) shared service centre in Riga, Latvia, and close the company's Leuven, Belgium, service facility, reported Mike McNulty for Rubber News.

It devised the plan after an extensive evaluation of the firm's shared service capabilities in the EMEA region, the company said in a form it filed with the US Securities and Exchange Commission.

The project is expected to be completed by the end of 2014, subject to completion of a required consultation process with its Leuven employees, John Reese, vice president of global marketing for reinforcement materials, said in an interview.

“Our customers choose Cabot because they know they will get the best combination of quality, service and technology possible,” he said. “Also, they know that we are committed to operating wherever they need us to help grow their business.”

Creating the new centre in Riga will enable the company to offer the highest quality of service at the most competitive cost, according to Reese. “Riga has a deep talent pool, a strong IT and communications infrastructure, a growing services sector and considerable cost advantages.”

He said the move will help Cabot maintain customer service as a competitive advantage in Europe, adding that it is just one individual move and not tied to a larger restructuring plan.

The company expects cash charges of between $19m (€13.7m) to $22m (€15.9m) for the intended closure and the transition to Riga. Those costs will include severance and employee benefits along with other expenses. The cash outlays are expected to occur over the next two years, the firm said, and it anticipates a minimum of $6m (€4.3m) of annual cost savings, starting in 2015.

Cabot has 20 locations throughout the EMEA region, including production plants in Belgium, Czech Republic, France, Germany, Italy, the Netherlands, United Arab Emirates and the United Kingdom, Reese said. “We continue to operate 43 manufacturing facilities in 21 countries worldwide, and we are committed to operating facilities in locations where our customers need us to grow.”

The specialty chemicals and performance materials producer followed that strategy in 2013. Throughout last year and into 2014, it has continued to focus on improving the competitiveness of its business through strategic expansions and acquisitions, the introduction of new products and the execution of its business initiatives.

“We have just added another 130,000 tons [117,934 tonnes] of capacity in Asia with the opening of our new carbon black plant in Xingtai, China,” Reese said.

Using state-of-the-art technology at the new facility, the firm will be able to supply Cabot's ultra-reinforcing products that serve as key materials in the production of high performance tires for the Chinese and Asia-Pacific markets, he said.

In addition, he said, the Boston-headquartered company has invested heavily in advanced emissions control and energy efficiency at the site to minimise its environmental footprint and at the same time reduce energy consumption.