Cognis Carving Out Oleochemicals


Cognis Corp. announced last week that it plans to form its oleochemicals business into a separate company on July 1. Previous statements about the plan triggered an ongoing four-month strike at its main U.S. factory in Cincinnati.

The new company, named Cognis Oleochemicals LLC, will be a wholly owned subsidiary of Cognis Corp., the U.S. subsidiary of Cognis Deutschland GmbH, of Dusseldorf, Germany. Cognis processes plant oils into synthetic lubricants and ingredients for applications ranging from food and pharmaceuticals to detergents, inks and textiles.

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The new oleochemicals business will consist of manufacturing activities that turn plant oils and tallow into fatty acids, glycerin and ozone acids, including oleic acids used as feedstock to make Cognis synthetic lubricants. Officials said they needed to separate the oleochemical operation for it to succeed in a changing market.

For a number of years companies manufacturing glycerin and fatty acid from natural raw materials have had to deal with massive changes in the global market and competitive situation, Cognis Oleochemicals President Guy Penard said. In addition, fatty acids and glycerin are no longer seen as specialty products – they have become commodities.

A spokeswoman for Cognis Corp. saidits synthetic lubricants business will not be affected by the carve-out. The operations designated as Cognis Oleochemicals employ 100 plant and office workers.

The overall Cognis facility in Cincinnati employs approximately 250 union members of United Steelworkers of America Local 14340. Union workers went on strike Feb. 7 after the expiration of a one-year extension to their previous three-year contract with the company. Union officials say workers struck because Cognis refused to give assurances that those employed in the oleochemicals business would retain their jobs in the event of a change in ownership.

All we wanted to was to write something into the new contract that said our jobs would be protected if they sell [the oleochemicals business] or turn it into a joint venture, Local President Mike Eggie told Lube Report Monday. But theyve refused to do that. So why would they refuse to do that unless they were planning to sell it?

A Cognis spokeswoman declined to say specifically whether the company wants to sell the oleochemicals business.

We are looking at a number of options for a sustainable future for this business, and we have shared this objective for more than a year during negotiations with the union, said Kathy Bollmer, manager of corporate communications for North America.

Not surprisingly, Cognis and the union offer different opinions about whether the strike has disrupted plant operations. Both agree the company has enlisted more than 200 replacement workers.

Discussions between the two sides continue, but neither predicted whether the strike will be settled soon.

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