The business makes sealants and caulks used in construction and home improvement products that are sold under the General Electric (GE) brand.  Momentive will, however, retain the construction sealants product line, which it said will remain a focus for the company.

The Waterford, New York-based producer said it will continue to manufacture consumer sealants through 2021 under a transition supply agreement with Henkel.

Industry analyst Kent Furst at market researcher Freedonia Group said the sale makes sense for Momentive. “Consumer products aren't a great fit for Momentive, and the move allows the company to sharpen its focus on specialty silicones for industrial customers. It also fits in with the company's strategy to reposition the remaining operations at the Waterford, New York facility toward advanced applications, in order to keep the site globally competitive.”

Other Freedonia industry analyst Matt Zielenski added that Henkel will be well-positioned for sales growth as it integrates this business into its own sealant operations and its already strong roster of recognized brand names – such as Loctite and OSI – will be enriched by the addition of Momentive's GE-branded products.

Accelerated shift to silicones

At the same time as the sale announcement, Momentive also outlined a series of steps to accelerate its transition from making commodity basic chemicals to specialty silicones.

Measures include a $15 million investment in specialized electronic materials production and a two-year program to move away from manufacturing basic chemicals at the Waterford site.

The investment in electronic materials, also at Waterford, will be spent on new capabilities to serve fast-growing high-tech applications. It is part of a $40 million global investment to drive growth for electronic materials in areas such as advanced aerospace, 5G telecommunications, automotive electronics and advanced display applications. The new production will be operational starting in mid-2021.

The transition strategy envisions a phase out of basic chemicals production at Waterford, starting in 2021 and continuing in 2022, with the loss of approximately 300 jobs out of the 1,000 current employees. Momentive said the change would position the facility as a sustainable, global center specializing in advanced silicone technologies.

“Our industry dynamics have changed dramatically over the past decade with rapid commoditization of basics chemicals, globalized supply chains and increasingly specialized customer needs and we want to ensure Waterford remains viable and sustainable,” said Michael Foley, Momentive’s president and general manager of core silicones and intermediates.

The company added that it continues to explore additional investment opportunities in the New York area, including the potential for a new global corporate headquarters. It is also evaluating investment opportunities in upgraded R&D capabilities.

Author: Elaine Burridge, Freelance Journalist