Nissan 20% production cuts add to chem auto woes

HOUSTON (ICIS)–Warnings from chemical companies about upcoming auto shutdowns are becoming true, with Nissan becoming the latest automobile producer to announce reductions in its workforce and global production capacity after slashing its forecast for operating profits during its current fiscal year.

Chemical producers have warned that automobile producers had started taking unscheduled and prolonged downtime in the third quarter, and the trend will continue in the fourth quarter.

For Celanese, the downturn was sudden and painful, especially for its Engineered Materials segment, contributing to a big Q3 miss in its earnings and a decision to temporarily idle plants in the fourth quarter.

Trinseo, which also makes engineered materials, expects a lot of its customers will shut down operations during the fourth quarter.

The latest ICIS auto forecast still expects builds to increase in 2024. The rate of growth will slow in 2025.

Automobiles represent a key end market for plastics and chemicals because nearly every component has some chemistry.

The latest data indicate that polymer use is about 423 pounds (192kg) per vehicle. Chemicals are also used to make antifreeze and other fluids, catalysts, coatings and adhesives.

AUTO CUTBACKS SO FAR
Nissan plans to cut global production capacity by 20% and reduce its workforce by 9,000. The move is part of a plan to reduce fixed costs by 300 billion yen and variable costs by 100 billion yen when compared to its fiscal 2024, which will end on 31 March.

Nissan has slashed its outlook for fiscal year 2024, as shown in the following table:

	Revised FY 24 Outlook	Previous FY 24 Outlook
Revenue	12,700.0	14,000.0
Operating profit	150.0	500.0

Source: Nissan

Stellantis is cutting 1,100 jobs at its US plant in Toledo, Ohio, which produces Jeep vehicles, according to a report by the Wall Street Journal, a business publication. In the late summer, it reported Stellantis’s plans to lay off 2,450 workers in Michigan state after it decided to end production of a truck model.

Volkswagen has called for a 10% pay cut for workers in Germany in order to ensure its competitiveness and safeguard jobs.

According to media reports, the auto major may close three of its 10 plants in Germany and cut thousands of jobs.

Additional reporting by Stefan Baumgarten

Thumbnail shows automobiles. Image by Costfoto/NurPhoto/Shutterstock.