As Robert Gibbens, seasoned observer of the Canadian industrial scene, reports today in the Montreal Gazette, Pétromont will be shuttering its Montreal East and South Shore Varennes plants indefinitely on April 30. About 300 will lose their jobs, including 176 unionized workers. The two key reasons are the Canadian dollar at par, up from 87 cents U.S. in a year, and feedstock prices based on oil at $91 U.S. a barrel, up from $54 U.S.
The threat of this happening has been there almost from the beginning. Pétromont and Co. LP was formed in 1980 when Gulf Canada, Union Carbide and SGF (Société générale de financement du Québec), the province’s equity investment arm, formed a limited partnership to operate certain petrochemical plants.
John Dinsmore was the founding president of Pétromont and I was the third employee as V.P. Marketing and Business Development. Given the economic pressures of running a modest-scale petrochemical plant on heavy naphtha and gas oil feedstocks from overseas, survival was a constant battle.
Gulf Canada, the original owner of the Varennes ethylene plant, almost immediately wanted to leave the partnership and very soon did so. Gulf Canada was acquired by Conoco and exists no longer. Union Carbide continued and brought in some of its other petrochemical activities. However Union Carbide eventually succumbed and was acquired by Dow. The limited partnership is now owned equally by Dow Canada, part of U.S. multinational Dow Chemical Co., and the SGF.
Pétromont had annual sales of about $750 million. The Montreal East plant makes polyethylene resins sold mainly in North America, while the Varennes plant produces basic petrochemicals. The headquarters, including marketing and administrative staff, is at Varennes. Another pressure on Pétromont’s continuing survival was Basell‘s decision last year to close its polypropylene (PP) plant in Varennes (originally built by Hercules Inc.), which was supplied propylene feedstock via a pipeline.
Pétromont spokesperson Louis Rail said that both plants will be mothballed, in case market conditions change or there is serious outside interest, but with no dismantling of equipment. Hope springs eternal ..