Write Down from China Trade War

Lenzing Group mill in Axis, Mobile County. Photo by Todd Douglas

Austrian textile company Lenzing Group has a big factory in Mobile, Alabama, as well as one in Nanjing, China, 300 miles from the city of Wuhan. But it’s not the threat of a virus epidemic that is troubling the international fiber maker as much as the U.S. trade war with China.

Lenzing, a public company, released disappointing 2019 annual figures in late January and blamed much of its trouble on a write down of engineering costs at the Mobile plant, where a $293 million expansion had been announced in December 2016.

Lenzing planned to make the Mobile factory the showplace for its fibers of the future, specialty fibers made from cellulose, processed from wood.

Two years later, the company continued with its specialty fiber expansion but relocated it in Thailand, in order to avoid retaliatory tariffs on U.S. sales into China.

Preliminary figures released by Lenzing reported 2019 net profit fell to 114 million euros ($127 million) from 148 million in 2018. Officials also blamed reduced profits on historically low prices for viscose, the generic term for wood-based fiber.

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The planned Alabama expansion would have tripled production at the factory in Axis, on the Mobile River, adding 163 jobs to the current 185-worker total.

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