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Spanish specialty cellulose and viscose producer Sniace withdraws layoff plans, sends employees on two-month leave

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Spanish specialty cellulose and viscose producer Sniace withdraws layoff plans, sends employees on two-month leave

July 29, 2013 - 16:53

BRUSSELS, July 26, 2013 (RISI) - Production at Spain's Sniace, a chemical industrial group active in specialty cellulose, viscose, cogeneration and biofuel, will remain down for up to two more months.

Following several rounds of negotiations between employer and employee representatives over the financially troubled firm's decision to terminate the contracts of 364 of its employees, Sniace withdrew the redundancy plans it announced in mid-June. Instead, the contracts of all Sniace employees are suspended for a maximum of two months from today to give the firm more time to find a way to ensure its future viability.

Sniace got into financial trouble due to the extra costs caused by the Bill on Fiscal Measures for Energy Sustainability in Spain that came into force on January 1. The firm's viscose production has been down since mid-January. Specialty cellulose output was reduced by 30% from the same date and has been at a standstill since early July.

In late June, Sniace filed for the initiation of so-called "pre-concurso" proceedings at the Commercial Court of Madrid. The firm now has until late October to reach an agreement with its creditors and restructure its debt in order to avoid bankruptcy.

Amongst others, Sniace will negotiate structural changes relating to the reduction of personnel costs over the next two months. The firm said it was envisaging early retirement schemes for some 100 employees and a 20% reduction to wages and salaries.

Moreover, Sniace will continue its talks with the relevant authorities about ways to minimize the effect of the new energy bill and modifications of different aspects of its Integrated Environmental Authorization that might help the firm to return to profitability. According to Sniace, the following changes are essential for its future viability: First of all, the firm would need to sell 100% of its cellulose output on the open market. At present, 40% of production is consumed internally.

Secondly, Sniace said, it would need to ramp up its viscose fiber capacity to 70 tonnes/day and produce 100% fire-retardant fabrics. Finally, the firm expressed the need to raise its specialty cellulose output from the current 180 tonnes/day to 240 tonnes/day.

Sniace's cellulose and viscose arm used to operate a vertically integrated factory on the Sniace grounds in Torrelavega. Amongst others, the complex includes a 66,000 tonne/yr TCF soluble cellulose pulp plant, a 126,000 tonne/yr lignin sulphate production plant and a 26,000 tonne/yr TCF viscose production facility.