AVON LAKE, OHIO — Thomas Waltermire doesn't believe in starting slow.
Less than three weeks after Geon Co. — the Avon Lake-based firm which ranks as North America's largest PVC compounder — announced Waltermire would replace the retiring William Patient as Geon's chief executive officer, Waltermire said he expects the company to reach $2 billion in annual sales by the end of 2000.
That's only a 54 percent jump over Geon's 1998 sales total of $1.3 billion. No problem.
``We're talking about growth and innovation driving and increasing our market,'' Waltermire said during a May 17 interview in Avon Lake. ``We're going to be customer-focused instead of material-focused.''
This is a new Geon Waltermire's talking about. The company had been one of North America's largest PVC makers since spinning off from BFGoodrich Co. in 1993, but recently combined its PVC resin operations with those of Occidental Chemical Corp. into Oxy Vinyls LP, a venture in which Geon holds a 24 percent share.
With commodity PVC production in the background, Geon now can focus on value-added PVC compounding and acquisitions that could move the company into new products such as specialty polyolefins, engineering resins or thermoplastic elastomers, Waltermire said.
``It's very hard to operate as a multipolymer service company when you have a huge investment in the hardware of making a single material,'' he said. ``With that one change [forming Oxy Vinyls], the complexity of this place takes on a different feel.
``We still have considerable interest in how Oxy Vinyls performs, but we can now think of PVC as one raw material. We've got the capacity and market presence to focus on other opportunities.''
Make no mistake. PVC compounding still will be at the heart of the company. Non-PVC materials, including TPEs and cross-linked polyethylene Geon gained by acquiring rival compounder Synergistics Inc. in 1997, make up less than 10 percent of total sales.
Geon compounds more than 1.5 billion pounds of PVC annually at 12 locations in North America and through joint ventures in Australia, England and Singapore. The firm holds almost 40 percent of the North American PVC compounding market. Its closest competitor, Georgia Gulf Corp. of Atlanta, checks in at 15 percent.
Geon funnels its compounds into a range of markets where they end up in products like appliance housings, computer and electrical enclosures, pipe fittings, vertical blinds, windows, medical tubing and bags, wire and cable insulation, weatherstripping, and automotive parts.
With the focus on compounds, Geon believes the company can escape somewhat the volatility of the commodity PVC market.
PVC prices were up an average of 9 percent in 1996 and 3 percent in 1997 before dropping an average of 24 percent in 1998. Prices already are up 11 percent this year, and that's without taking into account seasonal fluctuations. Compound prices tend to react to market swings more slowly and to a lesser degree than resin prices.
``You can look at what we've done as essentially outsourcing our resin business,'' Waltermire said. ``We now have a mentality that says we can work with a range of materials, distribute resources to our customers, solve problems and give ideas. That's not the way you think if you're producing a commodity material and focused on being the low-cost performer.''
A good chunk of the growth needed to reach the goal of $2 billion by 2000 will come from acquisitions, but Waltermire offered few details of what that will entail. Since 1997, Geon has added more than $300 million in annual sales through acquiring Synergistics and a trio of dispersion PVC compounders: Plast-O-Meric Inc., the Wilflex Ink Division of Flexible Products Co., and Adchem Inc.
``If in real terms you're growing 10 percent a year, that's fine growth in your basic markets, but the rest of the growth will have to be done through acquisitions,'' he said.
As CEO, Waltermire also will have to deal with the various allegations of health risks surrounding PVC use. He said Geon continues to take such claims seriously, even though they've had a very minor effect on the company's business results.
``We know [PVC] is saving lives every day and saving a huge amount of natural resources such as trees and water,'' Waltermire said. ``If a group of people would harm or limit that, it would be a real loss to society.''
Internationally, Geon is looking to expand its existing joint ventures through compounding agreements in the Far East, Latin America and Europe.
``We're looking into areas where people need the basic building blocks of life around them, such as housing,'' Waltermire said. ``That's where PVC comes in.''
Wall Street apparently agrees with the direction Geon is taking, as the firm's stock has fared better than some of its competitors through a downturn in the chemicals industry since late 1997. Geon's share value was around $31 May 19 after being about $23 in early 1998.
By comparison, Borden Chemicals and Plastics LP dropped from $9 down to $7 per share and Georgia Gulf slipped from $30 to $14 in the same period. Borden and Georgia Gulf rank fourth and fifth, respectively, in North American PVC production.
``Geon has always done better than most during down cycles because of their management,'' said Shannon Batchman, a stock analyst with Fitch IBCA Inc. of New York. ``They've been able to control costs.''
Fitch IBCA's Susan Goodman agreed, saying the Oxy Vinyls venture allowed Geon to gain access to larger-scale resin production without making a significant capital expenditure.
Analyst William Young of New York's Donaldson Lufkin & Jenrette investment firm also was upbeat about Geon's outlook, pointing out that the Oxy Vinyls venture will make Geon's earnings less volatile while allowing Geon to produce somewhat better products than commodity-grade PVC.
For his part, the 49-year-old Waltermire says he's up to the challenge.
Waltermire has been groomed for the CEO slot during the past couple of years, including a promotion to executive vice president and chief operating officer in 1997.
Waltermire had been with BFG since 1974 and was named Geon's senior vice president and chief financial officer at the time of the 1993 spinoff.
Waltermire said he plans to be a vocal and outgoing CEO.
``I expect to be quite public,'' he said. ``We're the leaders in what we do and a leader needs to speak up and be known. That's part of our culture here. We have strong feelings about things being done the right way.''