The Birth of a Global Materials Company
Dow Spinout Styron Hits the Ground Running
When the news broke in November 2009 that both Dow and BASF were looking to sell their styrene assets, the race to find buyers was on. Now, seven months later, BASF still owns its assets, saying that they are performing well and that they are in no hurry to sell. Dow, however, recently closed the sale of its Styron unit to global private investment firm Bain Capital Partners. Now a standalone company, Styron is setting out to maintain its leading position in latex and polystyrene production. Brandi Schuster spoke with Paul Moyer, Styron's vice president for plastics, about the brand-new company's outlook, its continuing ties with Dow and its strategy for remaining competitive.
CHEManager Europe: Mr. Moyer, Dow has a 7.5% equity position in Styron; long-term supply, service and purchase agreements have also been made. To what extent do you plan on using the Dow name to leverage Styron?
P. Moyer: We'll continue to have a strong relationship with Dow; many of our plants are within Dow sites, and the company will also continue to provide many services to Styron - and vice versa. We also have our strong heritage from Dow, from the customer services we offer, to our focus on innovation and operational excellence. But now, instead of being one of many inside Dow, the products we offer now take center stage. We now have a much sharper focus on the customers we serve.
As an independent company, we are able to move much faster and we are able to concentrate on our key bread and butter products - latex and polystyrenes- in a way that just wasn't possible inside a large company.
How does Styron plan on positioning itself in the market?
P. Moyer: There are three important factors that we bring to the market: Our leadership position; our heritage; and innovation. We have a strong track record of successful, customer-driven innovation, and this is something we plan on accelerating. We are now able to intensify relationships with our customers to help them innovate and grow; and we have several interesting innovation projects in our pipeline.
To what degree is Styron backwards integrated? How affected are you by price volatility within aromatic raw materials?
P. Moyer: Looking at styrene monomers, we have a balanced supply portfolio. We produce our own in very competitive facilities, have long-term contracts with suppliers and we also buy on the open market as well. Looking out on the horizon as far as styrene is concerned, we are very pleased with this set up.
More and more styrene is expected to hit the market as the worldwide recession comes to an end. How does Styron plan on counteracting price pressure?
P. Moyer: The pricing pressures from styrene monomers come and go with the volatility of the marketplace. Our pricing is really based on the value we bring to our customers and their applications. As I mentioned before, we're constantly working with our customers on innovation.
P. Moyer: Several years ago, we introduced a new family of polystyrene resins under the name Styron A-Tech. This new line of resins made it possible for our customers to use less material while still retaining the performance characteristics. That family of resins became the gold standard in the industry. We are now working with industry leaders on the next generation of these resins, which will be launched this year.
This is where we capture value on the marketplace. We bring a value proposal to our customers that allows them to use less material while maintaining a high standard of performance. That's our strategy as we go to market.
Are there plans to invest more in technology and capacity for polystyrene?
P. Moyer: While there won't be a lot more investment in capacity for polystyrene, we are investing in polystyrene technology and innovation in order to continue to differentiate Styron on the marketplace.
About 60% of your workforce is in Europe. How cost competitive is polystyrene production at Styron's plants compared to other producers located in the Middle East or Asia?
P. Moyer: Compared to other kinds of plastic and rubber products, polystyrene is not a resin that tends to flow in great quantities across regions; therefore it's a logical consequence to produce close to the consumer. Our plants in Europe are very cost competitive. We are where our customers are today and where our customers and the growth will be in the future.
In North and Latin America, we go to market via the joint venture Americas Styrenics. Our European and Asian plants are in a strong position, both in terms of cost and logistics. All of our plants are cost competitive in the industries they serve.
New plants are cropping up in the Middle East and Asia, forcing older assets to close. Is Styron looking to divest any of its 20 manufacturing sites worldwide?
P. Moyer: That is not our intention moving forward. Our intention is for top-line, profitable growth.
Organic growth or will acquisitions also play a role?
P. Moyer: We will take it all into consideration. There are plenty of opportunities in the markets in which we participate, and we are always looking for opportunities as we move forward. There is nothing imminent, but that is certainly a part of our growth strategy.
Where do you see room to grow in the mature styrene market?
P. Moyer: Our product portfolio is very unique - we're not just about polystyrenes. We have products in the pipeline for all of the industries we serve, from consumer electronics to packaging, to automotive, to building and construction. There is plenty of room for growth across our entire portfolio.
What is your outlook for the rest of the year?
P. Moyer: We are excited. We have plenty of opportunities in front of us, and we want to continue the smooth transition to marketplace. Our goal is to continue to work with customers and help them grow and be successful together.