Jeff Lipton, Nova Chemicals Corp. president and chief executive officer, has taken the reins of the firm's styrenics business in the wake of the resignation of Senior Vice President Wes Lucas. Lucas, who resigned Jan. 6, had been with Calgary, Alberta-based Nova since February 1998. He previously had been vice president of AlliedSignal Inc.'s engineered materials division in Morristown, N.J.
Company officials said Nova has begun an external search for a new president for the division, which ranks as North America's largest producer of polystyrene and styrene.
PS prices rose an average of 9 cents per pound in 1999, but producers struggled to convert those increases into higher profit because of rising styrene prices and production costs.
In spite of those conditions, Nova spokesman Jeff Flood said Lucas' departure was not connected to the styrenics unit's business performance.
"The whole styrenics leadership team has done a good job of increasing profitability," Flood said.
Lucas could not be reached for comment. Flood said Nova was unaware if Lucas had accepted a position with another company.
Nova's styrenics business posted a loss of $2 million through the first three quarters of 1999, according to company records. The unit lost $31 million during the same period in 1998.
In an Oct. 26 conference call, Lipton said the styrenics unit was expected to fall short of the $30 million earnings-improvement target the company had set at the start of the year. More than half of that goal would be met, but the rest of the improvement would be delayed into 2000 because of the delayed opening of a styrene plant in Sarnia, Ontario, the temporary shutdown of an ethylene plant in Corunna, Ontario, and other factors.
Lipton also reported that the styrenics unit to date had achieved $23 million in savings from its 1998 acquisition of Huntsman Corp.'s styrenics business — a deal that propelled Nova past Dow Chemical Co. and into the No. 1 spot in the North American PS market.
The unit's sales volume dropped in the third quarter. PS sales industrywide were up almost 3 percent through October, according to the American Plastics Council in Arlington, Va.
Through September, Nova's styrenics unit had accounted for almost 46 percent of the firm's total sales. Overall, Nova's sales total of $2.02 billion was 28 percent higher than the same total for the first nine months of 1998, while its profit of $109 million was more than three times greater than its nine-month count the previous year.
Flood added that the unit achieved "substantial growth and improved performance" in 1999 in spite of the challenge of increasing styrene monomer costs.
"That division is still not as profitable as we'd like, but that's not unique to Nova," he said. "The same goes for polystyrene producers globally."
Industry contacts speculated that Lipton assumed control personally because of Nova's pending acquisition of Shell Chemicals Ltd.'s European PS plants in a deal worth about $215 million. The acquisition will more than double Nova's styrenic polymers capacity in Europe, to 1.4 billion pounds per year.
Nova's Flood said Lipton "recognizes the importance of the Shell acquisition and wants to make sure there's not any absence of leadership" in the styrenics unit.
Lucas played a role in the 1998 Huntsman acquisition, but Flood said that CEO contributions "are usually key in deals of that level."
Lucas' leaving is "probably a nonevent" in Nova's long-term prospects, but may have been a sign that the styrenics units wasn't improving as quickly as management would have liked, according to David Davidson, a stock analyst who covers Nova for Toronto's Newcrest Capital Inc. investment firm.
"Nova's had a fairly significant relocation, with a lot of personnel going from Calgary to Pittsburgh, and [Lucas] probably got caught up in that," Davidson said, referring to the firm's recent establishment of a U.S. headquarters in Moon, Pa.
"Styrenics hasn't delivered in the last couple of years. A lot of that's tied into industry cycles and changes at Nova, but your profitability as an individual is always tied into your unit."
Nova's per-share stock price bounced between $20 and $24 for most of 1999, even though PE and PS prices were up considerably. It closed Jan. 19 at $19.75.