CHICAGO (June 27, 5:50 p.m. EDT) — Honeywell Inc. plans to hold on to its plastics operations, contrary to widespread speculation that the Morristown, N.J.-based firm would sell them after deciding they did not fit into its aerospace focus.
"This unit has had a very large holding in nylon and other specialty plastics for a long, long time," Gary Cappeline, president of Honeywell's specialty chemicals unit, said at NPE 2000 in Chicago. "Honeywell Specialty Chemicals is an extremely profitable business. This business is core to us."
Cappeline also dismissed the argument that Honeywell would sell its plastics business for the same reason that BFGoodrich Co. of Charlotte, N.C., is selling a similar business. Like Honeywell, BFG has a strong aerospace segment, which officials said has different goals than the plastics unit.
"BFGoodrich has a different portfolio of specialty chemicals than we do," Cappeline said. "Honeywell doesn't want to be considered a pure aerospace play. You can pick up 5-10 (price-to-earnings) points in your stock by being a diversified play."
Steve Hochhauser, vice president and general manager of Honeywell's plastics business, said the firm will continue to find new uses for its nylon and polyester resins and films in the pharmaceutical, packaging, power distribution and telecommunications markets, but will be selective in moving into different materials.
"We'd love to broaden our product mix," Hochhauser said. "But a lot of the time when I ask our sales guys what they would do if we had a certain material, they say, `Well, if we could get it for a nickel less, we could get some business.' That's not the way we want to do it."
Hochhauser added that his unit has received "all the support from corporate that I've asked for" since Honeywell merged with AlliedSignal Inc. in 1999. Since then, the unit has acquired a compounding plant in Ansan City, South Korea, and has added fluoropolymer film capacity in Geismar, La.
"As long as we show results, (corporate support) will continue," Hochhauser said. "The more opportunities we can bring Honeywell, the more likely we are to be a success."
Honeywell ranks as North America's second-largest maker of nylon 6. Its films unit brought in about $300 million in sales in 1999, while its compounding business had sales estimated at $144 million, ranking as one of the 25 largest U.S. compounders.
