Sonoco CEO Lynn Elsenhans first announced that the company intended to exit the refinery business in September, saying that “given the unacceptable financial performance of these assets, it is clear that it is in the best interests of shareholders to exit this business and focus on our profitable retain and logistics business.”
In November, she announced that she would consider closing the plants earlier if Sonoco shareholders decided that keeping them open were no longer economically viable. At the time of the announcement, Sonoco officials said that the refining and supply sector of the company had taken $17 million hit for the quarter – the ninth out of eleven prior quarters which it had experienced a loss.
Soon thereafter, on December 1st Sonoco issued a press release announcing plans to begin idling the main processing units at Marcus Hook due to the deteriorating refining market and stated plans to seek a buyer and pursue options with third parties to explore alternate uses for the plant site. Referencing the Philadelphia site, Sonoco stated that that it would continue to operate as long as conditions allowed, but disclosed that the refinery would close if a buyer was not found by July 2012.
As for the 600 or so salaried Marcus Hook employees, Sonoco said that they would redeployed to other positions where possible and provide severance benefits and job placement services to those who cannot be redeployed. The company planned to enter into talks with union officials.
“I’m extremely, extremely disappointed that they did not honor their commitment to us,” said Dave Miller, president of the United Steelworkers Local Union 10-901 which represents about 300 Marcus Hook employees, in response to Elsenhans’ announcement.. ”[she is] going to leave this area to be devastated.”
According to a December story published in the Journal Register, Sonoco spokesperson Thomas Golembeski said approximately 100 of the 590 jobs are expected to be retained 65 people with 65 people being offered redeployment elsewhere throughout the company and 35 remaining at Marcus Hook for ongoing operations and retail support.
As for the 490 jobs lost, Golembeski said that 100 of employees affected are eligible for retirement.
Not surprisingly, the news of the possibly-doomed Marcus Hook and Philadelphia refineries has Pennsylvania politicians up in arms.
In a press release dated February 29th, Senator Pat Toomey commented on a study conducted by the US Energy Information Administration at the request of himself and Senator Bob Casey and Pennsylvania Representatives Chaka Fattah, Pat Meehan and Allyson Schwartz, stating that closing the refineries would render negative economic repercussions on the entire Northeastern region by increasing crude oil prices.
“If the Sonoco Philadelphia refinery shuts down, wholesale and retail product prices relative to crude oil are expected to increase…possibly spiking in some areas…This report only affirms my desire to see these facilities sold as refineries and these good-paying jobs saved.”
Sen. Casey met with Sunoco’s chief executive last Thursday to demand an explanation from Sunoco for the decision.
There are rumors that the owner of a refinery in Western Pa. is considering a bid for the property.