A Newcastle chemicals company has wiped almost £1million from its wage bill and reduced its head count by 25 as it battles to reduce its losses and against soaring raw material costs.
Wallsend-based Chemson, which has cut its staff from 90 to 65 at its Northumberland Dock Road plant, reported a reduction in pre-tax losses on ordinary activities from £5.4m in 2011 to just over £2.1m last year.
The company, which makes and sells lead-based chemicals for the UK and European PVC industry, said in its annual report that due to slow market demand, its sales fell by 13.3%.
It reported that it had responded to the rise in raw materials by increasing production efficiency, establishing new sustainable processes, adapting and optimising its plant, as well as the job cuts.
The company said: “The economic crises, still showing an ongoing impact in Europe, affected the business in 2012.
“The difficult market conditions arising from the building and construction industry, to which a high percentage of Chemson’s business is linked, persisted in 2012 as the European and UK markets experienced a slower than expected recovery.
“In parallel, the difficult situation in the procurement market continued with further increasing raw material prices.
“The magnitude and speed of these increases have made it difficult to pass on the required level of increase in a timely fashion. Fixing practices for any period over one month is no longer practised due to the very poor short-term visibility on currency and feedstock pricing.”
Chemson, whose operational director Paul Knowles and commercial director Daniel Stofler both resigned in January, said it has still continued to work hard on increasing its market share. It said: “Clear definition and ownership of target customers is decreasing our time to market and increasing strike rate on new developments.
“Chemson continues to further develop its range of market-leading lead-free products for all of the necessary application areas.
“We will not stand still with this approach and continue to develop this technology. Internally, the drive is still on to ensure that our costs are always matched to market conditions without the group’s strategic and operational targets at risk.”
Chemson is a wholly-owned subsidiary of Chemson-Polymer-Additive AG in Austria.
Its parent company, which also has sites in Brazil, China, the US and Australia, aims to make its production 100% lead-free, and therefore safer and more environmentally-friendly, by 2015.
The drive is still on to ensure that our costs are always matched to market conditions