Versum Moving to Arizona
Air Products’ spinoff heading West; job loss undetermined
Versum Materials’ headquarters is moving to Arizona. Employees must decide whether to move or lose their jobs.By Anthony Salamone Of The Morning Call
Air Products said Tuesday it will be moving one of its divisions out of the Lehigh Valley, the latest in a string of decisions focused on reshaping the industrial gases giant that have resulted in the loss of hundreds of jobs through layoffs or relocation.
The move will take its spinoff company, Versum Materials, to Tempe, Ariz., famous for warm weather, the Grand Canyon and, according to the company, as a hub for semiconductor businesses.
Moving the Versum headquarters was not unexpected. Earlier this month, Air Products’ spokesman Art George said top executives at the new company wanted to relocate its research and development employees as close as possible to its customers in the western U.S. and Asia.
But the move will mean the loss of more Lehigh Valley jobs.
George said Air Products officials have not determined how many positions will move to Tempe. Employees must decide whether to move or lose their jobs.
Don Cunningham, president and CEO of Lehigh Valley Economic Development Corp., said he understands the move will affect a “couple hundred” employees.
If that is the case, Air Products will have shed more than 600 Valley jobs in the last couple years. The company said earlier this year it had cut 435 local jobs during a worldwide restructuring that slashed about 2,000 in total.
Versum will form from Air Products’ electronic materials division, which employs about 250 in the Lehigh Valley out of a total workforce of 1,900. It makes products for chips used in mobile devices and other technology.
Some of Versum’s administrative functions will remain in the Allentown area, such as accounting and information technology, said Guillermo Novo, who will be Versum’s CEO.
George said officials expect to set up a new Versum facility “in commuting distance” of Air Products’ world headquarters on Hamilton Boulevard in Trexlertown.
“Versum will continue to have a significant footprint in the Lehigh Valley area,” Novo said in a news release.
Air Products has streamlined its operations since 2014 under Chairman and CEO Seifi Ghasemi. The company has slashed about 2,200 jobs globally, or 10 percent of its workforce, including 435 jobs in Trexlertown. About 3,000 people in the Valley work at Air Products, a Fortune 500 company with about 19,700 employees worldwide.
Versum’s move to Tempe, which already is home to one of the company’s four electronic materials operating facilities, is strategic, Novo said.
“We have existing electronic materials production, research and development, and a workforce in Tempe, and our major U.S. customers are located in the western U.S.,” Novo said. “Additionally, over 70 percent of the market is now in Asia and it continues to grow.”
George said Novo and other Versum executives will be moving to Tempe, where Air Products has had operations since the mid-1980s. About 90 people work there now, he said.
“Locating in Tempe will allow us to improve our connectivity with both our U.S. and Asia teams and customers,” Novo said. “This decision is part of a broader plan to be closer to our customers and position Versum for success.”
Cunningham said he’s gathered from Air Products officials that it was strictly a business decision to set up in Arizona. “It made sense, because of the customer base and activity in Asia,” he said.
“Conversely, we’re optimistic about Evonik,” Cunningham added.
Air Products announced in September that it will form Versum by spinning off two divisions, including electronic materials, which posted sales of about $1 billion in 2015. Since then, the company said one of those divisions — performance materials — will be sold for $3.8 billion to Germany’s Evonik Industries AG. The Versum spinoff is to be completed in September.
“Locating in Tempe will allow us to improve our connectivity with both our U.S. and Asia teams and customers.”
— Guillermo Novo, CEO of Air Products spinoff Versum Materials
Evonik has said it will welcome all employees “with open arms,” and has no immediate plans to move or remake the performance materials division, which has 1,100 employees globally, when the sale closes this year. Air Products has said it expects Evonik to continue running the performance materials business from the Lehigh Valley, where it has a couple hundred employees.
Air Products’ Hometown plant, which employs about 200 people, will become part of Versum and should not lose jobs, said Frank Zukas, president of the Schuylkill Economic Development Corp. Air Products has invested heavily in the plant in recent years, he said.
Versum does research and development there as well as in Taiwan and Korea.
“The Hometown facility is fully under the umbrella of the new company,” said Zukas, who said its main product, nitrogen trifluoride or NF3 gas, is used in electronics. “From long-term longevity, the facility at Hometown should be in good stead.”
But in Upper Macungie Township, where Air Products has made its home for years, township Manager Daniel Olpere likened the Versum announcement to the loss of 341 manufacturing jobs at the Kraft Heinz Co. plant, which is also in the township.
With Versum, he noted, the township is losing “good paying white-collar jobs.” He added, “Any loss of jobs in the dozens or hundreds is not good for the local economy.”
Cunningham is optimistic, noting Evonik’s commitment to staying in the Valley and a recent speech by Ghasemi in which he told business leaders that Air Products will remain anchored in the Valley.
“It’s not a perfect situation by any means, but … Air Products and Evonik are the much larger operations,” he said.