Borden Chemicals and Plastics LP plans to stick with PVC. The Columbus, Ohio-based firm, which ranks as North America's fifth-largest PVC maker, recently completed a business review that determined the company should "evolve into a focused PVC resins business," according to a Jan. 25 statement from newly elected board Chairman William Carter.
Rumors of Borden's eventual fate have swirled for the past year and a half, as the firm has struggled to compete with larger rivals. The company lost $23.8 million last year, after losing $40.6 million in 1998.
Industry insiders and analysts have expected the company or parts of it to be sold. Last week's announcement endorses Borden's Geismar, La.-based PVC business, but throws the future of its methanol and nitrogen products business units into doubt.
In the nine months ended Sept. 30, PVC accounted for about 73 percent of Borden's sales, with methanol adding 18 percent and nitrogen products the remaining 9 percent.
Carter said Borden is "developing specific plans for our non-PVC businesses in order to realize maximum value in the near term."
He also cited the methanol and nitrogen products businesses as primary reasons for the company's 1999 loss. Although Borden's PVC sales basically were flat in 1999, its methanol sales dropped about 17 percent and nitrogen sales dropped about 18 percent. Overall, Borden has posted losses in 10 consecutive quarters.
Borden still was able to post an overall sales gain of 3.5 percent, mainly because of a strong fourth quarter in PVC. PVC prices rose 16 cents per pound in the United States in 1999 as domestic demand climbed 7 percent, an increase 4-5 percent higher than many producers and analysts expected.
"Over the course of our history, our product mix has been a good one," Borden spokesman Pete Loscocco said in a Jan. 27 telephone interview from Columbus. "PVC might be up one year and down the next, but things tended to balance out.
"In the last couple of years, we've struggled with the down cycle in the commodity chemicals sector. PVC recovered last year, but methanol and nitrogen products are still down."
Options for those segments include joint ventures or outright sales, according to Loscocco.
Borden's decision to focus on PVC may be a result of the company's inability to find a partner or buyer since announcing its intentions to do so in January 1999, according to Richard O'Reilly, a chemicals industry analyst with Standard & Poor's Equity Group in New York.
PVC maker Georgia Gulf Corp.'s September purchase of rival Condea Vista Co.'s PVC business also may have affected Borden's decision, industry contacts said. Both firms had been mentioned as possible partners for Borden.
"When Georgia Gulf bought Condea Vista, that made one less person for Borden to go to the dance with," he said. "Now they're going to go dance by themselves."
Borden's lack of integration in the vinyls chain and lack of compounding capabilities may have impaired the company's ability to link with a rival or outside chemicals firm, according to industry insiders.
"Borden is a pretty small company in an industry that's gotten bigger," O'Reilly said. "They're just playing the best hand they have."
Borden also is continuing to work with Salomon Smith Barney Inc. of New York to explore options for the overall business. Loscocco said the work is being done independently of the review, which Borden did with Boston's Arthur D. Little Inc. consulting firm.
Additionally, Borden aims to hire a new chief executive officer to replace Joseph Saggese, the firm's chairman, president and CEO who retired Jan. 25 after a 40-year career with BCP and Borden Inc.