DÜSSELDORF, GERMANY (Dec. 10, 4:30 p.m. EST) — Earlier this year Kraton Polymers LLC hung out an “Under new ownership” sign. Now, with some infrastructure changes complete and a deep-pocketed parent, Roger Morgan suggests the company's motto should be “Full speed ahead.”
“I'd characterize 2001 as a year where we had to work very hard to put in place the systems to be an independent company,” said Morgan, global director for Kraton D and vice president for Europe, Africa and the Middle East, in an interview at K 2001 in Dusseldorf.
Kraton D is the company's patented family of unhydrogenated styrenic block copolymers.
The firm produces more than 100 grades of thermoplastic SBC elastomers, using technology its researchers developed four decades ago. The materials commonly are used to make or modify products ranging from footwear and soft-grip handles to adhesives and sealants, as well as asphalt roads and roofing.
Morgan noted the 1,000-employee TPEs producer had to establish its own finance department this year. The firm, which had been based in London, relocated its Houston office and made it into the new corporate headquarters. Additionally, the company relocated its London and Tokyo offices, and opened a new office in Hong Kong.
All this occurred after Royal Dutch/Shell Group last March officially completed the sale of Kraton Polymers to Ripplewood Holdings LLC, a New York private equity investment company, for between $500 million and $600 million.
The deal represents Ripplewood's first foray into chemicals and polymers, after entering partnerships in automotive retail, food manufacturing, technology, industrial manufacturing and supplemental education markets.
“2002 is when we'll really start our progress,” Morgan said. “We will start to see the results of our collaboration with Ripplewood. The footprint of Kraton Polymers' business will start to change. We'll add more capacity, while also growing in other ways as well.”
The company will look to grow by acquisition, perhaps by the first half of next year.
Kraton Polymers, which previously said it expected 2001 sales to approach $650 million, does not reveal profit or break out production capacities by plant. Morgan claims the company, with some 660 million pounds of capacity at six manufacturing locations worldwide, is “pretty much running flat-out.” He also acknowledged, though, that “we haven't grown as much this year as in other years — like everyone else.”
The company announced recently that it was doubling capacity in Belpre, Ohio, for Kraton D1401P, a high-clarity, high-styrene block copolymer. It also is expanding capacity in Berre, France. But Morgan said the company has grown cost-effectively.
“I've been involved with Kraton D since 1996. In that time, we've added the equivalent of 1½ new plants of capacity, without actually building a plant,” he said.
As a result, the investment was perhaps one-quarter or one-third of what it otherwise might have been. He said Kraton Polymers can continue to meet growing demand by increasing production capacity incrementally by “being clever” in how it runs its plants.
He claims that having multiple plants and large capacity gives his company an advantage over its smaller competitors — the largest of which, Italy's EniChem SpA, has significantly less than half of Kraton's global production capability.
“We can dedicate plants to larger runs. It helps with the consistency of the product,” he explained, when, for example, a single type of polymer can run for 60 days straight on a production line.
At the Belpre site, for instance, the company runs four separate plants — two for Kraton D and two for Kraton G. The latter is hydrogenated SBC that offers much higher light and heat stability, and hence costs two to three times what Kraton D costs.