CLEVELAND — Geon Co. is looking to build on its 1997 sales total of $1.25 billion and may be willing to move beyond its core PVC resin and compounding businesses to do so.
Recent acquisitions of compounding rival Synergistics Inc. and plastisols manufacturer Plast-O-Meric Inc. are fueling Geon's desire to build beyond its PVC base, Geon Chief Executive Officer William Patient said at the firm's annual meeting May 7 in Cleveland.
``We'll no longer focus only on vinyl-based products,'' Patient said. ``Our two most recent acquisitions have exposed us to other polymer technologies that complement some of our strong market positions.
``Our acquisition team has identified a number of promising opportunities in other polymers, and we will pursue them.''
Geon, based in Avon Lake, Ohio, is the second-largest PVC maker and largest PVC compounder in North America. Its acquisition of Synergistics of Mississauga, Ontario, gave Geon control of more than one-third of the North American PVC compounding market.
Synergistics now gives Geon access to cross-linked polyethylene, plasticizers and thermoplastic elastomer production, while the Plast-O-Meric move pushed Geon to the top spot in plastisols, which are PVC compounds with high plasticizer levels to increase flexibility.
Geon officials said new ventures could include the Synergistics and Plast-O-Meric products, but would not be limited to those areas.
``We're talking about things that are complementary to what we're doing,'' President and Chief Operating Officer Thomas Waltermire said at the Cleveland meeting.
Geon's 1997 sales were up more than 9 percent from 1996, but still represented a drop of more than 1 percent from final 1995 numbers. Along with other PVC makers, Geon has had to contend with dropping resin costs tied in to overcapacity and the downturn of the Asian export market.
``If you look at our situation, it's classic Economics 101,'' Patient said. ``Demand is excellent, but 10-15 percent of the industry's capacity was being exported, and when the market died late last year, that capacity flowed right back into the U.S. market.
``Ten percent was added, and we had already added 7 percent through capacity expansions, so we practically had a net increase of 17 percent in capacity.''
Geon officials also expressed disappointment that the firm's return to shareholders has only increased one-third since its initial public offering after splitting from BFGoodrich Co. in 1993.
Some of that stock performance, said Patient, can be tied to stock analysts' negative view of the PVC industry.
``[Analysts] give [Geon] all kinds of credit for the things we've done, but they say the structure of the PVC industry is going to have a difficult time with overcapacity in the next few years,'' Patient said.
This viewpoint is tied strictly to business results and has not been affected by the industry's battles with activist groups concerning PVC's environmental safety, said Patient and Waltermire.
``I think analysts see these people over here talking and flapping [about PVC], but then they look at the industry ... growing at twice the rate of the [gross national product],'' Waltermire said. ``This is an infrastructure polymer. Society wants it to continue to grow.''