What will GE Plastics do with a nylon business? Let´s put it this way: Some folks in Wilmington, Del., and Leverkusen, Germany, will be considering that question very carefully in the next few months.
General Electric Co.´s Oct. 22 deal to buy Honeywell International Inc. for $42 billion was driven primarily by the companies´ similar aerospace-related businesses, and GE´s interest in keeping rival United Technologies Corp. from buying Honeywell.
But the acquisition also creates an interesting combination of Six-Sigma-powered engineering thermoplastic suppliers.
GE Plastics is a leader in polycarbonate and ABS, of course. But don´t forget its blends, compounds and smaller-volume ETPs; its GE Polymerland resin distribution business; and its GE Structured Products sheet manufacturing and merchandising unit.
Add Honeywell´s leading nylon 6 business to that mix and you´ve got a recipe for an ETP supplier that can, at least in North America, satify the needs of a lot of automotive, electronics, business equipment and medical processors.
But what will GE do with the Honeywell plastics business? Here´s a bit of speculation:
* GE will market the former Honeywell nylon and polyester business to death. Isn´t this what GE Plastics does best? They´ll introduce new materials, rebrand and reintroduce old ones, and generally try to make as big a splash possible with every morsel of publicity. We´re preparing now for the onslaught of "news" releases.
* GE will find a way to expand in nylon internationally. Two problems had hamstrung Honeywell´s plastics business: the lack of a larger ETPs portfolio, and its weak position outside North America. Joining the GE camp takes care of the first problem. Look for GE to expand the brand globally, either through fresh acquisitions or greenfield expansion.
* GE may sell the Honeywell films business. Some analysts speculate that nylon films don´t really fit with GE Structured Products´ polycarbonate sheet business. By now everyone knows GE´s strategy: if they can´t be No. 1 or a strong No. 2 in the market, they´ll sell it.
DuPont is a pretty big force to compete against in nylon films, although Honeywell may have some interesting niches that make holding the business worthwhile for GE — or someone else.
* Expect the combined businesses to harness the Internet in some creative ways. Both companies were pioneers in online resin ordering, and GE Polymerland is the big kahuna in plastics e-commerce.
Finally, it´s worth considering the relative positions of nylon 6 and nylon 6/6 in the U.S. market. Historically, DuPont´s leadership in North America has meant that nylon 6/6 held the leading role, while in other parts of the world nylon 6 is the front runner. GE´s acquisition clearly does not change DuPont´s position. But putting GE Plastics´ marketing muscle behind nylon 6 could begin to tip the scales.
