Dive Brief:
- Citing a $438 million project loss as of March 2018, Japanese company Toyo Engineering, the general contractor for polyvinyl chloride (PVC) producer Shintech's $1.4 billion Plaquemine, Louisiana, plant expansion, has canceled contractor CB&I's two remaining civil and dirt work contracts for the project effective June 14, according to The Advocate.
- As a result, CB&I, which completed a $6 billion merger with McDermott International in May, laid off 370 contract workers that it had working at the plant. CB&I notified the Louisiana Workforce Commission of the layoffs June 19 and reportedly told the commission that it had tried negotiating with Toyo in an effort to continue work at the facility. Toyo said that the Louisiana Shintech job was its only problem project and that CB&I was not capable of performing adequately, leading it to hand over CB&I's scope of work to two other contractors.
- Shintech said it was still committed to the project, one that the company predicted would be completed by now. The project will see the addition of an ethane cracker facility to Shintech's existing PVC and vinyl chloride monomer (VCM) production facilities.
Dive Insight:
Louisiana and the rest of the U.S. Gulf Coast, known for its energy facilities, has also seen major petrochemical construction projects underway or planned, developments primarily attributable to the booming natural gas industry there.
In April, Taiwanese company Formosa Petrochemical Corp. announced it would build a $9.4 billion manufacturing complex during a 10-year, two-phase development process between New Orleans and Baton Rouge, creating an ethylene "hub" that would produce ethylene, propylene, ethylene glycol and related polymers. The project is expected to generate as much as 8,000 construction jobs at peak activity and could break ground as early as next year. The state of Louisiana is subsidizing the project to the tune of $12 million as long as Formosa can reach required employment goals once the new facilities are operational.
However, President Donald Trump's tariffs on steel and aluminum imports could stymie at least one petrochemical-related project in the Gulf Coast region. The looming trade war with China has put at risk a $1.1 billion manufacturing plant project announced last spring by chemical company Wanhua , according to The Advocate. Company representatives said that it is seeking an exemption from the steel and aluminum tariffs, but, if unsuccessful, the added expenses could increase project costs by tens of millions of dollars, forcing the company to reevaluate the investment.
