March 3, 2006

Kyowa Hakko's subsidiary BioKyowa to cut US facility workforce
 

In what appears to be yet another sign of the global amino acid industry adjusting itself, US amino acid producer BioKyowa announced on Mar 1 that it will cut its Missouri plant's workforce by 25 percent in 2007, to keep pace with global competitors.

Calling it a "major re-organisation", the company said that about a quarter, or 37 of its 145 workers at the amino acid facility will have to leave, with up to 30 employees given the option to take part in a voluntary separation programme that will offer larger severance packages.

But the company--a subsidiary of Japan's Kyowa Hakko and its main overseas production centre--is not the first to have to re-adjust itself in view of plunging prices of amino acids such as lysine.

As BioKyowa president Terumi Okada pointed out, the company's competitors like Ajinomoto and other smaller Chinese companies, have already announced plans to significantly lower their production costs in both their local and overseas plants, which make many of the same amino acids BioKyowa produces.

BioKyowa was set up in the US 1984 to manufacture feed-grade lysine, but today its principal products are health foods and industrial amino acids, having ceased production of farm-grade lysine in 2001.

Its parent company Kyowa Hakko is a global supplier to food, pharmaceutical and chemical industries, with net sales of about US$3.3 billion annually.

In a press release dated Jan 30, the company announced that its net sales for 2005 Q1-3 ending Dec 31, at JPY272.2 billion, was 1 percent lower from 2004's. Operating income was JPY22.8 billion, a fall of 12.3 percent from the previous year.

However, the company remains optimistic that it would achieve its full-year forecasts, said its president Dr Yuzuru Matsuda.