DuPont streamlines distribution network

WILMINGTON, DEL. (Updated Aug. 5, 5:25 p.m. ET) --Engineering resins leader DuPont Co. has selected PolyOne Corp. as its primary resin distributor in North America.

Wilmington, Del.-based DuPont had worked with both PolyOne and Ashland Distribution for several years, but now “feels the need to be more strongly aligned with a single partner,” DuPont engineering polymers sales director James Hay said in an Aug. 5 conference call.

As a result, DuPont will end its supply agreement with Dublin, Ohio-based Ashland in early November.

“We’re trying to position ourselves for growth coming out of the economic downturn,” Hays added. “We needed to simplify our channels to market and look for simple, complementary channels.”

The agreement between DuPont and Avon Lake, Ohio-based PolyOne covers several materials, including DuPont’s market-leading nylon resins as well as acetal, liquid crystal polymer, polybutylene terephthalate and others.

“This is a good fit for both companies in a lot of ways,” PolyOne senior vice president and general manager Michael Rademacher said during the conference call. “It’s important for us to make this as seamless as possible for DuPont and its customers.”

Hay declined to say what portion of DuPont’s North American engineering resin sales are done through distribution. He confirmed that, prior to the change, DuPont was doing an equal amount of business with both PolyOne and Ashland.

Ashland vice president Michael Gilbert said in an Aug. 5 phone interview that his firm already has products lined up to replace the DuPont offerings. In the case of DuPont’s nylon resins, Ashland can offer resins and compounds supplied by BASF Corp., the Chem Polymer unit of Teknor Apex Co. and the LNP Engineering Plastics unit of Sabic Innovative Plastics LP.

“We’ve been working very hard to build a line card around several key elements, including being best in class, being with suppliers who are making significant investments in the business and being with suppliers who can offer continuity of supply,” Gilbert said.

“We regret DuPont’s decision, but we recognize that their strategy has evolved.”

Hay said DuPont “is constantly reviewing all of its channels” and began reviewing its resin distribution setup 8-12 months ago — well before Ashland’s decision to sign on with engineering resins maker Sabic IP in March. That move led Bayer MaterialScience LLC and BASF Corp. to redirect some of their business away from Ashland.

At DuPont, Hay said the Ashland/Sabic deal “was not a key determining factor” in his firm’s choosing PolyOne over Ashland.

Ashland’s Gilbert agreed, saying that some observers “might jump to that conclusion, but inappropriately so.”

DuPont and Sabic IP have somewhat different product mixes in engineering resins — DuPont is basic in nylon, Sabic IP is basic in polycarbonate — but their materials do compete in several markets and applications.

Gilbert pointed out that Ashland will continue to be a distributor of other DuPont products, including EVA copolymers and Surlyn-brand ionomers. Hay added that DuPont will maintain some pre-existing deals with smaller distributors in Canada and Mexico.

The DuPont-PolyOne move is the latest in a flurry of activity that has bombarded the North American resin distribution market in 2009. In addition to the Ashland-Sabic deal, the following transactions have taken place since January:

* Bayer MaterialScience LLC opting out of a polycarbonate distribution deal with Ashland, instead adding M. Holland Co. of Northbrook, Ill., and retaining PolyOne, Amco Plastic Materials of Farmingdale, N.Y.; and Christler Chemicals & Plastics Inc. of Wilsonville, Ore.

* Entec Polymers/Ravago Group of Maitland, Florida acquiring Performance Polymers of Leominster, Mass.

* BASF moving its styrenic resins business from Ashland to existing suppliers M. Holland, Entec/Ravago and Amco Plastic Materials of Farmingdale, N.Y.

* PolyOne striking deals with materials suppliers Ineos ABS Corp., MRC Polymers Inc. and Diamond Polymers.

“There’s been a lot of change in the distribution space in the last several years,” PolyOne’s Rademacher said. “That’s pretty representative of change in the supply chain. It’s the kind of economy we’re in.”

“Until the economy recovers, there will be continuous pressure for companies to make strategic decisions,” added Gilbert at Ashland. “They’re all looking at their distribution models in order to rationalize and reduce costs.”

Both PolyOne and Ashland rank among North America’s largest resin distributors, according to industry estimates. Ashland generated sales of more than $4 billion in fiscal 2008 from plastics and chemicals distribution, but the firm doesn’t split out how much of that amount came from North American resin. PolyOne’s 2008 resin distribution sales totaled almost $800 million in 2008.

Distributors and resellers sold more than 9 billion pounds of polyethylene, polypropylene, polystyrene, nylon and PVC in North America in 2008, according to the American Chemistry Council in Arlington, Va. That total represented about 15 percent of total domestic demand for those materials last year.

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