Two-Year Transition from Basics Chemicals Operations

INSIGHTS

Momentive is moving forward with its two-year vision to phase out basics chemicals production at its Waterford, New York site. The transition will position the facility as a sustainable, global center specializing in advanced silicone technologies. Operational changes surrounding basics chemicals production will not begin until 2021, continuing through 2022.

Supporting our Colleagues

After the two-year transition, Momentive intends to maintain a major presence in the Capital Region, retaining approximately 700 of the 1,000 current employees. These changes discussed with IUE-CWA union leadership and will not begin until 2021, continuing into 2022.

Throughout this transition, Waterford will remain one of our top global production facilities, with a workforce focused on our strengths and still providing more than $150 million annually in economic impact.

We recognize that our plans to modernize and refocus the Waterford site around our positions of strength will bring significant changes for our employees over the next several years and we will support our colleagues and their families along the way, showing them the respect and appreciation they deserve.

The company outlined its two-year vision on August 5 and began negotiations with IUE-CWA union leadership shortly thereafter. Momentive appreciates the discussions with union leadership, as well as the efforts union representatives made in studying the proposed plans and the strategic direction in which the company is moving. Talks will continue regarding the impact on employees eventually affected by the transitions.

“a transition in difficult times”

Momentive’s vision for the Waterford site is to transition and fully focus on our positions of strength, with a more sustainable environmental footprint, continuing to use our expertise and unique capabilities to create real value for our customers.

Mike Foley, President and General Manager of the Core Silicones and Intermediates Business offers his insights into this multi-year journey.

Ongoing Commitment to the Capital Region

Momentive continues to explore additional investment opportunities in the Capital Region, including the potential for a new Global Corporate Headquarters. The company also is evaluating investment opportunities in upgraded Research & Development capabilities.

“The Capital Region is a great home for Momentive as we serve our customers domestically and around the world,” Momentive President and CEO Sam Conzone said. “We plan continued investments here and remain committed to creating a sustainable and exciting future for Momentive and our Capital Region employees.”

“The world has changed everything about our business, and we want to ensure Waterford remains a big part of Momentive’s future.”

Mike Foley

President and General Manager, Core Silicones & Intermediates Business

Ongoing Discussions

The company outlined its two-year vision on August 5 and began negotiations with IUE-CWA union leadership shortly thereafter. Momentive appreciates the discussions with union leadership, as well as the efforts union representatives made in studying the proposed plans and the strategic direction in which the company is moving. Talks will continue regarding the impact on employees eventually affected by the transitions. We will continue to update this site as conversations continue.

When would these changes take place? 

Operational changes surrounding basics chemicals production will not begin until 2021, continuing through 2022. Throughout the transition, Waterford will remain one of Momentive’s top global production facilities with a sustainable workforce focused on the company’s strengths.

Meeting Updates

Representatives from 81359, 81380 and Momentive have met over the past two months regarding the company’s two-year vision for Waterford’s basics chemicals operations, and now will focus discussions regarding the impact on those employees eventually affected by the transitions. The teams will continue to follow personal COVID-19 precautions, and we will continue to keep everyone updated as appropriate. Momentive appreciates the discussions with union leadership, as well as the efforts union representatives made in studying the proposed plans and the strategic direction in which the company is moving.

RESOURCES

Update: Momentive and IUE-CWA Reach Transition Agreement

Momentive Performance Materials and IUE-CWA Locals 81359 and 81380 completed an agreement that clears the path for our continued transformation of the Waterford facility into a global center specializing in advanced silicone technologies.

The agreement with Local 81359 and 81380 includes an enhanced special retirement bonus program for eligible employees beginning in July 2021, the addition of approximately 30 positions in key areas to improve efficiency, the creation of a cross-functional team focused on decommissioning operations that will be shut down, and the creation of employee committees focused on continuous improvement for Waterford’s success well into the future. These steps offer expanded roles and flexibility to meet our customer needs.

Momentive is committed to Waterford being a major presence in Capital Region as it continues to be a top global production facility with a more sustainable and flexible workforce focused on the Company’s strengths. ‘

In August 2020, Momentive announced a series of steps to accelerate the company’s global transition from commodity basics chemicals to specialty silicones including a $15 million investment in Advanced Electronic Materials Production in Waterford and the sale of its Consumer Sealants Business. The company also announced a two-year transition from basics chemicals production in Waterford, positioning the site as a sustainable, global center specializing in advanced silicone technologies.“This is a key milestone on our Waterford transformation journey, but there is still work to be done,” said Edward Mills, Momentive Vice President Operations, CS&I. “We appreciate the Union leadership and representatives from Locals 81380 and 81359 in reaching this next step in Waterford’s long-term vision to being a growth site attractive for investment.”

MPM Silicones LLC / Momentive Performance Materials, Inc. – Public Meeting

Momentive’s two-year plan to phase out basics chemicals production in Waterford will significantly reduce the manufacturing footprint of the facility.  Upon completion, this work is expected to result in a 75 percent reduction in hazardous waste generated, 50 percent reduction in wastewater generated, and significant reductions in water and power use, among other improvements. On February 22 2021, Momentive held a public meeting detailing specific changes to the Waterford site.  You can view the presentation from our public meeting here.

 

 

ANSWERS

Featured Question

Will Momentive be completely shutting down production or exiting its Basics portfolio in Waterford next year?

No. Our two-year transition plan to position our facility as a sustainable, global center specializing in advanced silicone technologies does not mean we are exiting our Basics product offerings. We will continue to produce Basics products in Waterford, such as polymers, fluids and cyclics (including D4 and D5). We will also continue to offer products from across our global network of facilities. As a global company, Momentive has an extensive footprint and a sophisticated supply chain management system that enables us to utilize a diversified model which is not wholly reliant on a given supplier, country or region.

Will Momentive be completely shutting down production or exiting its Basics portfolio in Waterford next year?

No. Our two-year transition plan to position our facility as a sustainable, global center specializing in advanced silicone technologies does not mean we are exiting our Basics product offerings. We will continue to produce Basics products in Waterford, such as polymers, fluids and cyclics (including D4 and D5). We will also continue to offer products from across our global network of facilities. As a global company, Momentive has an extensive footprint and a sophisticated supply chain management system that enables us to utilize a diversified model which is not wholly reliant on a given supplier, country or region.

“As an operator in Waterford, when will I know if I am impacted?”

No final decisions have been made regarding the future of Waterford basic chemicals. It will likely take at least several months – if not longer – to reach any final decisions, and to be able to discuss specific individual decisions. We provided a proposed plan for Waterford that included initial outlines to the union leadership in our first meeting and will have many more conversations as part of the process. We will continue to keep everyone informed as best we can along the way.

The envisioned changes being discussed with union leadership might not begin until 2021 and could take place over a two-year period. In the meantime, nothing changes today. Our focus is still on everyone’s safety and in serving our customers well.

“How will we produce Specialty Growth grades of products if we begin accepting lower quality siloxane inputs?”

Our customers expect only the best from Momentive, and we would never accept “sub-standard” feedstocks from others. We rigorously follow our management of change and stringent raw material qualification processes. We have qualified inputs sourced both internally from within the Momentive global network, as well as from external sources in our supply chain. Multiple quality control steps are needed to assure a quality final product. The Manufacturing, Technology, Quality and Procurement teams all play a critical role to assure the quality standards of all of our raw materials are met.

“Is it a risk to rely on future siloxane supplies only from China?”

We will not be sourcing solely from China. While China is the major global producer of commoditized siloxanes, we have qualified inputs sourced both internally from within Momentive’s global network, as well as from external sources in our supply chain, to ensure the quality and delivery requirements of our customers. Standardizing raw materials across plants and ensuring we have multiple qualified supply sources have been key areas of strategic focus for us.

“How many current employees would be affected by this move?”

Potentially about 300 over two years. Realigning our Capital Region operations around sustainable technologies will create a presence of about 700 employees, from about 1,000 currently. Waterford will remain one of Momentive’s top global production facilities. The changes discussed with IUE-CWA union leadership will not begin until 2021 and continue into 2022, ultimately supporting a more sustainable union presence focused on customized products and processes.

 

“Are these changes related to the coronavirus pandemic and current economic impact?”

No. Our vision of Waterford becoming a global center specializing in customized advanced silicone technologies is driven by the increasing commoditization of our Basics Chemicals products over the past several years. This, in turn, reduces customers’ appreciation for our products and limits our growth and opportunities ahead. Given the two-year process that would be involved in such a transition, starting now will help ensure that our transition is completed in 2022.

"Could you just moth-ball some operations and bring them back later?"

Companies typically moth-ball an operation in the expectation the economic conditions will improve one day. That’s not the case here. The global impacts of increased competition and commoditization of Basics Chemicals are here to stay. This erodes the potential of ever making Waterford a competitive and strategic site in the Basics Chemicals space.

"How long will discussions with the union continue?"

Momentive outlined our two-year vision on August 5 and has continued discussions with IUE-CWA union leadership. Talks will continue regarding the impact on employees eventually affected by the transitions, and we look forward to our ongoing partnership in supporting a more sustainable union presence focused on customized products and processes.

If we built an even bigger Basics Chemicals operation, would that allow us to compete for those products?

This potential view has been extensively researched. We would be putting hard-earned investments into product lines that are already globally commoditized – meaning customers often view competing products as identical and seek lowest cost options. That would leave us competing largely on price against massive producers around the world – which is not our formula for success.

Instead, we see Momentive’s strength and future in customized innovation and in creating precise solutions for tomorrow’s advanced applications. These are the product lines in which we show our strength and customers appreciate our advantage.

 

 

 

 

"When would these changes take place?"

The transition in Basics Chemicals will begin in 2021 and continue through 2022.

 

What is “commoditization?”

“Commoditization” occurs when a product becomes so common that it is generally indistinguishable from one supplier to another. Customers see commodity products as essentially identical from one rival company to another, which makes the products lose their unique value and perceived advantages.

When this happens, the value – and therefore the price – deteriorates in the marketplace. Achieving the “lowest cost possible” often becomes the focus of the customer and therefore suppliers. Suppliers facing commoditization often are limited in how they can grow business, invest in the future, or attract and retain the best employees.

How do we overcome commoditization at Waterford?

Many of the Basics Silicones products manufactured at Waterford have become “commoditized” over recent years. This limits our abilities and future. To overcome this, Momentive’s vision for the Waterford site involves a transition away from Basics Silicones to fully focus on our positions of strength. Our investment in Electronic Materials is an example of the strategic approach we will use to drive this change. Ultimately, our goal is a new Momentive in which Waterford’s innovation, expertise and unique capabilities are truly valued and appreciated in a way that allows us to grow, invest and reward.

What is the future of silicone?

Advancements in silicone formulations are allowing new construction methods for office buildings and homes, new high-tech applications in electronics, and solutions for electric vehicles. Silicones can be customized in a variety of forms – liquids, gels, resins, emulsions, etc. – for use in an incredible array of applications, such as flexible tubing in biopharmaceutical processing systems, emulsions that enhance the sensory experience in personal care products, and high-temperature adhesives used in advanced industrial applications.  In addition, they provide tremendous barriers to keep out moisture, insulate electricity and protect other materials from decomposition. These features make silicones extremely valuable in a wide universe of special applications in construction, aerospace, electronics and other industries.

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