Germany’s Allessa to Cut a Third of the Workforce

Allessa, the Frankfurt, Germany-based fine chemicals producer sold to private equity investor International Chemical Investors (ICIG) for an undisclosed sum in October, plans to cut the 900-member workforce by about a third. The company cited the need to streamline operations to remain competitive. Where the cuts will be made is to be announced during the week of Dec. 17.

The streamlining, already in progress, will go hand-in-hand with the planned merger of Allessa with WeylChem, a Frankfurt-based detergents and intermediates producer acquired by ICIG from Swiss specialty chemicals producer Clariant, also in October. Combination of the two portfolios would create a company with annual sales of around €500 million.

Rafael Reiser, current CEO of WeylChem has been appointed head of Allessa.

Both chemical companies were part of the now defunct Hoechst group. The WeylChem activities were among the fine chemicals businesses merged into Clariant by Hoechst CEO Jürgen Dormann after the multinational group's breakup in the 1990s. Allessa emerged from Hoechst subsidiary Cassella. Both have production facilities in the Höchst industrial park in Frankfurt, and Allessa has its base at another Frankfurt location.

With the dissolution of the Hoechst conglomerate, many of the synergies between the two portfolios were destroyed, and "it is time to enable them again," said Allessa supervisory board chairman Karl-Gerhard Seifert, a former Hoechst managing board member.

Allessa has been operating under an austerity program for some time, with employees working at wages 6.7% below the chemical industry wage and executives taking a 10% pay cut. Authorities of Frankfurt and the German state of Hesse have pledged to provide support for the struggling business and the redundant employees.