ANAHEIM, CALIF.—Hexcel's John J. Lee shared insights on action items during his SAMPE speech and Plastics News interview:
New York rating agencies Moody's and Standard & Poor's have reaffirmed their Hexcel corporate ratings at Ba3/BB- and subordinated debt rates at B2/B for the pending acquisition of certain assets of Fiberite Inc. of Tempe, Ariz. ``I think all of the cognoscenti in that business on Wall Street are quite comfortable,'' Lee said.
Digesting the 1996 acquisitions of Ciba-Geigy Ltd. and Hercules Inc. units challenges Hexcel management. ``We're still struggling for the right formula,'' Lee said. ``We haven't figured out the best way to organize and balance the market segments of aerospace and nonaerospace, the cultural global issues and certain product line differences.'' As an added factor, there is the ``challenge now of how exactly to position Fiberite [Inc.],'' acquired earlier this year.
A driving force in the June 1996 Hercules acquisition ``was to be proactive to protect Hexcel [and] Hexcel customers for a [carbon] fiber supply down the road,'' Lee said. ``We have now completed expansion of the precursor facility'' in Decatur, Ala., and ``later in the fall, we will complete a significant expansion of our black fiber capacity in Salt Lake City, Utah, which will increase our capacity in the aggregate from 3 million to about 4.5 million pounds a year.''
Regarding the industrywide carbon fiber shortage, ``I think we are in the most difficult period now,'' he said. ``As we roll forward into the second half of this year, and certainly into 1998, that supply situation should ameliorate quite considerably.''
``I think joint ventures are good as long as everyone has exactly parallel interests. When they are not parallel, it is probably better to unwind them.''
In December, Hexcel sold its 50 percent equity interest in Knytex Co. LLC of New Braunfels, Texas, to joint venture partner Owens Corning Corp. Lee said Knytex became a business that was more aligned with Owens Corning's basic glass and rovings businesses and further from Hexcel's focus.
In other joint ventures, Hexcel owns 40 percent of infrastructure supplier Hexcel-Fyfe LLC of San Diego and 43 percent of material producer DIC-Hexcel Ltd. of Komatsu, Japan. Lee said the DIC-Hexcel operation has achieved ``one of the quickest qualifications'' for supplying commercial aircraft parts to Boeing Co.
In other actions, Hexcel has consolidated special process honeycomb manufacturing at Pottsville, Pa., and Burlington, Wash., plants, relocating operations from Casa Grande, Ariz., which continues as part of U.S. materials, and Bellingham, Wash., an aircraft interiors manufacturer.
Also, Hexcel consolidated European prepreg production at existing operations in Parla, Spain, and Duxford, England, from a Welkenraedt, Belgium, plant.