Editor's note: this article has been updated with a statement from Olin.
FREEPORT — Olin Corp.’s announcement it will shutter two of its Freeport plants permanently is a “dose of reality” that the area is not immune to the fluctuations of business, a local development official said.
“Following cessation of production, Olin will redeploy employees from these two facilities across the Freeport site," said Logan Bonacorsi, Olin director of investor relations, by email Thursday morning.
Olin is the third-largest private-sector employer in Brazoria County with 1,200 employees, according to the most recent survey by the Economic Development Alliance for Brazoria County. Only Dow Chemical and the Wood Group employ more, and Wood Group also provides contractors to Olin.
The decision to close a 230,000-ton chlor-alkali plant and a vinylidene chloride facility, revealed Wednesday in a news release, follows a softening market for those facilities’ products that hurt the company’s third-quarter performance, Olin Chairman, President and CEO John Fischer said in October.
Olin reported the decline in chlor-alkali products and vinyls business during its third-quarter results conference call Nov. 1, citing a lower demand from urethane, agricultural, refrigerant, alumina, and pulp and paper customers.
“During the third quarter, the Chlor Alkali Products and Vinyls and the Epoxy businesses have experienced weakness in demand across several product areas, which negatively impacted both volumes and pricing,” Fisher said in a news release. “We expect further weakness in both volume and price in the fourth quarter.”
Olin’s financial statement showed a decline of almost $100 million in earnings for the chlor-alkali and vinyl segment for the third quarter year over year, and a drop in sales from about $1.05 billion to $876.3 million.
The market experiences continual cycles of which the declining demand for the local plant’s products demonstrates, said Charlie Singletary, the local International Union of Operating Engineers business manager.
“The chemical industry as a whole is fluid. There has always been ups and downs in the market,” he said.
Any union members affected by the closures should be absorbed by other areas of the company, Singletary said. He also expects retirements and departures to happen before the official closures, which are set for late 2020.
Gary Basinger, executive director of the Alliance, hopes to see no or minimal job loss, he said, and Wednesday’s announcement is the “extent of it for Olin.”
“I hope it’s all that’s needed to help Olin move on,” Basinger said.
Things had been going well in local industry for so long, eventually things happen, Basinger said.
“It’s sad, but it’s a dose of reality that can happen with any business. They have to make these tough decisions,” Basinger said.
Brazoria County Judge Matt Sebesta said while he doesn’t have his “finger on the pulse” of the chemical industry, he hates to hear any plants are closing and also hopes to see no job loss.
While founded in 1892, Olin is one of the newer players on the Brazoria County petrochemical scene, arriving through a $5 billion merger with Dow Chemical in 2015 that included purchasing 40 percent of Dow Texas Operations’ holdings in Freeport. Facilities now owned by Olin are scattered throughout the salt dome, Plant A, Plant B and Oyster Creek sites and produce chlorine, caustic, VCM, EDC, epoxy and chlorinated organics, The Facts reported. In 2017, Olin opened a new bleach plant at the site.
The company expects the closures to reduce Olin’s annual operating costs by about $35 million, the news release states. It is taking a $65 million charge as part of the closure, it said.