H. Muehlstein & Co. jumped into the lucrative business of distributing small-lot orders for prime engineering resins by creating a new subsidiary, Channel Polymers. Channel Polymers will distribute resin in the United States for seven suppliers to start, and is working on agreements with additional firms.
Muehlstein became an independent company Feb. 9, when its 325 employees finalized a buyout from Mobil Chemical Co. Workers paid about $125 million for the company, Muehlstein President J. Kevin Donohue said in a March 5 telephone interview.
Muehlstein already sells more than 2 billion pounds of plastic and rubber raw materials and compounds annually worldwide, and claims to be the world's largest supplier of prime plastic and rubber resins. But the company traditionally has sold commodity polyolefins to large-volume buyers.
Muehlstein created Channel Polymers as a separate unit to deal with smaller-volume buyers of a variety of engineering thermoplastics - a market that most large resin suppliers have ceded to distribution companies like M.A. Hanna Co., General Poly-mers and A. Schulman Inc.
``We spent the last 18 months working on a strategy for the business,'' Donohue said. ``It was clear that ... the growth in distribution was in fact in the sale of prime resins to the customers and the industries'' that suppliers have stopped serving directly.
Donohue expects that business to triple within the next five to six years. Muehlstein officials did several things to prepare for the new strategy:
*While still under the Mobil umbrella the company downsized by about 15 percent, largely by reducing headcount in the administrative and support areas by about 30 people.
The company also reduced staff in Europe and closed an office in Brazil.
Despite the cuts, Donohue said it kept its sales and marketing force intact.
*The firm cut the paperwork requirements on its field sales force by implementing a new information system.
*The company set up deals with Mobil, Fina, Novacor, Good-year, Idemitsu, Miwon and Sam-sung to distribute materials including polycarbonate, ABS, polystyrene, polyethylene and polypropylene. Additional deals are pending.
*Muehlstein beefed up its compounding and technical support capabilities with a $7 million expansion to its Houston compounding plant.
The compounding operation, which specializes in filled polyolefins, will support both the traditional Muehlstein business and the new Channel Polymers unit. The company is considering compounding styrenics and other products.
Damian Mullin, sales manager for Channel Polymers, said he expects that unit's customers to have greater need for technical support than traditional Muehl-stein customers. Services that Channel Polymers will offer include troubleshooting processing problems, creating processing guidelines, and assistance with mold design and product development.
The company also will offer Channel Polymers customers a scrap-purchase-and-pickup program designed to take advantage of Muehlstein's experience in brokering scrap and recycled plastics.
Outside the United States, Muehlstein operates various affiliates and subsidiaries under the name Pegasus Polymers.