Denka Performance Elastomer (DPE) is halting production at its neoprene manufacturing plant near LaPlace, Louisiana, a facility that has faced intense regulatory scrutiny over its emissions of the likely carcinogen chloroprene. While the move comes amidst promises of regulatory relief from the Donald J. Trump administration, DPE cites the escalating costs of emission control, coupled with declining market demand and rising operational expenses, as the primary drivers behind the decision.
The Louisiana plant, acquired by DPE鈥檚 Japanese parent company Denka from DuPont in 2014, has been under the microscope of environmental regulators for years. A 2015 assessment by the US Environmental Protection Agency (EPA) revealed elevated levels of chloroprene, the starting material for neoprene, in the air surrounding the facility. This prompted the Louisiana Department of Environmental Quality to initiate air quality monitoring.
Production at the LaPlace facility was temporarily suspended last month for maintenance. DPE has indicated that no final decision has been made regarding a permanent closure, stating that it is exploring various options, including a potential sale of the entire plant or its infrastructure for a new industrial project. In the interim, Denka has assured its customers that the Louisiana plant鈥檚 supply will be fulfilled by its polychloroprene plant located in Omi, Japan. Denka anticipates incurring a $110 million charge to account for the production cessation.
In 2017, DPE agreed to take measures to reduce its chloroprene emissions. The company stated it invested $35 million in installing equipment that achieved an 85% reduction in chloroprene emissions compared to 2014 levels. Despite this progress, the EPA filed a complaint in 2023, pushing for further reductions, arguing that the emissions posed a significant health risk to the predominantly Black communities nearby.
The regulatory pressure intensified in April 2024 when the EPA introduced a new regulation capping chloroprene emissions. DPE contested this rule, claiming insufficient time for compliance and asserting that it unfairly targeted their facility, which is the sole US producer of neoprene, a versatile elastic rubber used in a wide array of products like wetsuits, hoses, and gaskets.
Following the election of Donald J. Trump, a shift appeared to be on the horizon for DPE. In March, the Trump EPA withdrew its lawsuit against the company and announced a reconsideration of the 2024 emissions regulation. However, DPE, in a recent statement, emphasized that there was no guarantee of a complete reversal of the regulation.
Beyond the regulatory challenges, DPE pointed to a confluence of economic factors contributing to the plant鈥檚 unprofitability. These include a decrease in the demand for neoprene and an increase in the costs of raw materials, labor, and energy.
