To get an idea of the complex nature of the plastics compounding industry, take a look at the kind of fiscal year A. Schulman Inc. just wrapped up.
Schulman spent $31 million on capital improvements, the second-largest one-year investment in the firm's 70-year history.
The spending added new twin-screw extrusion lines at Schulman plants in St. Thomas, Ontario; San Luis Potosi, Mexico; and Givet, France. An older twin-screw line was replaced in Crumlin, Wales. The new lines will create about a dozen new jobs.
The company also installed a new-product development center in Akron and expanded its lab sampling and testing capabilities in Sharon Center, Ohio.
Schulman also made a move on the acquisition front by buying Isopolymer Inc., a $30 million-per-year resin and compound distributor in Milan, Italy.
On the flip side of the coin, Schulman closed three lines in Akron, eliminating 15 jobs. It also laid off 28 workers at its Orange, Texas, plant. In a recent telephone interview, Terry Haines, Schulman president and chief executive officer, said the layoffs in Orange are likely to be permanent.
Like many companies categorized as ``specialty chemicals'' firms by the Wall Street investment community, Schulman's stock price suffered in the recent fiscal year. Schulman stock was selling Nov. 2 at $20 per share, after being around $23 a year ago.
In addition, Schulman shook up its board of directors to include more outside representation. A large California investor had criticized Schulman for having too many internal directors, but the company said the criticism did not influence its decision.
Haines said the seemingly contradictory events of 1998 can be chalked up to the company's changing product mix.
``We took out higher-cost manufacturing and moved into areas where we really needed growth,'' Haines said.
More importantly, Haines said, Schulman completed its first year of polymer-specific production, in which plants were devoted to individual materials such as PVC, polypropylene or polyethylene.
Haines gave that strategy a lot of the credit for raising Schulman's global capacity utilization from 83 percent to 90 percent for fiscal 1998, including a jump from 77 percent to 86 percent in North America. Lower resin costs also played a role in the improvement.
``Before we'd run three or four different polymers at a single plant, but now we've improved efficiency, quality and inventory control,'' Haines said. ``Next year, we want to take it further.''
Schulman now employs about 2,300 at 13 manufacturing sites worldwide. Roughly 70 percent of the company's products are PE-based or PP-based compounds.
The Fairlawn, Ohio-based firm, which ranks as North America's fifth-largest compounder, completed its fiscal year with sales of about $1 billion — basically unchanged from 1997.