WASHINGTON — Chevron Chemical Co. LLC has withdrawn from the Society of the Plastics Industry Inc., the fifth major resin manufacturer to leave the trade group in the past 18 months.
Chevron said low oil prices and Asian economic troubles are forcing it to evaluate its memberships in various trade associations. But it also pointedly told SPI that it wants to see the plastics industry unite under one trade association.
That comment comes as SPI and the other large industry trade group, the American Plastics Council, very gingerly are restarting merger talks that in the past have proven contentious.
The departure, effective May 30, signals a continued exodus of APC leaders and their money from SPI.
While some of the four resignations before Chevron were designed to pressure SPI, there are larger issues driving the departures, said one SPI board member who spoke on condition of anonymity: ``I think the real issue is they are spending an awful lot of money on two organizations.''
Nonetheless, each of the five large resin makers that have left SPI have leadership positions among APC's 24 member companies, including Chevron President John Peppercorn, who is currently chairman of APC.
Peppercorn's Dec. 28 resignation letter said the company wants to ``prioritize our participation in and representation by various state and national trade associations.''
He closed the letter noting, ``We believe that our plastics industry will be best served when both resin producers and converter-fabricators speak with one voice under one organization.''
Chevron spokesman Mike Marcy said SPI is a valuable organization and said the decision was painful.
But he said Chevron has not withdrawn yet from any other trade associations and will ``absolutely'' remain in APC because ``in our experience, APC seems to have served our particular needs as a resin manufacturer very well, while also addressing the concerns of the other parts of the industry.''
SPI spokeswoman Jennifer Dills declined to talk about the financial impact of Chevron leaving, but said SPI resin company members pay as much as $164,000 to SPI's core departments and more to some business units. SPI officials had a tight budget this year that held flat at about $30 million.
Each of APC's 24 member companies split a budget of about $40 million, by comparison.
SPI's revenues have been helped by picking up some larger processor members. But the loss of some resin company members and the impact of a previously planned dues cut for processors have cut into the group's funds.
SPI Chairman Harry Ussery said he is sorry Chevron is leaving, and the organization will urge the company to reconsider.
The other major resin producers that have left in the past 18 months are: Amoco Polymers Inc., Solvay America Inc., Exxon Chemical Co. and Nova Chemicals Inc.
Those companies make up substantial chunks of the North American resin market, according to estimates from Plastics News and Houston-based consulting firms — CMAI and Phillip Townsend Associates Inc. They compose 44 percent of the polystyrene market, 34-36 percent of high density polyethylene, 27-32 percent of linear low density PE, 21-22 percent of polypropylene and 19-20 percent of low density PE.
John DiFazio, director of issue management at Dow Chemical Co.'s Washington office, thinks SPI, with its current membership base, has enough critical mass of resin companies and processors to represent the industry.
But continued cost pressure and retirements are bringing in younger leaders who are asking questions about the value of trade groups, he said.
SPI and APC recently reopened their merger talks, but tight schedules forced the cancellation of a Jan. 8 session. The two sides plan to set another session after the SPI board meets in late January, Ussery said.
Both sides are proceeding cautiously in the merger talks, after efforts in 1997 collapsed.
APC is composed entirely of resin makers, while SPI is a mix of resin firms, processors, machinery makers and others.
Chevron belonged to two SPI units, the Polystyrene Packaging Council and the Plastic Pipe Institute.
PSPC has been hurt by the loss of Nova and now Chevron, but did pick up BASF on Jan. 1, said James Lammers, the SPI board member who represents PSPC. Lammers is also vice president of Dart Container Corp. in Mason, Mich.
PSPC very much wants to remain part of SPI, but the losses are forcing it to consider other, unspecified options, he said.
``We have to kick the tires to make sure that our continued association with SPI serves our goal of having as widespread polystryrene industry involvement as we can get,'' Lammers said.
But PSPC is not likely to make any quick decisions, given the dramatic changes going on in industry trade groups, he said. Those include SPI and APC's own internal restructuring.
Representing an industry as diverse as plastics is a challenge for SPI, Lammers said.
Plastic Pipe Institute officials declined comment.
In related news, APC picked up two new members recently: Aristech Chemical Corp. of Pittsburgh and Sasol Chemical Industries Ltd. of Johannesburg, South Africa.
Plastics News staff reporter Frank Esposito contributed to this story.