Eastman Chemical Co. is trying to coax its half-billion-dollar specialty plastics business into the spotlight.
``When you look for ways to differentiate, a number of things jump out,'' J. Brian Ferguson, Eastman chairman and chief executive officer, said at a March 14 press event in the firm's hometown of Kingsport. ``You see that those companies that are successful have focused on only a few things - the things they can be the best in the world at. We don't want to be an inch deep and a mile wide.''
For Eastman's specialty plastic, that means increased focus and market effort on its Eastar-brand copolyesters, as well as its liquid-crystal polymers and cellulosic resins. Even with sales down 8 percent in 2001, those products generated $505 million in sales, representing about 9 percent of Eastman's total.
And although specialty plastics' 2001 profit mark of $40 million was down 61 percent from the prior year, it still stood out for a company that lost a total of almost $180 million.
Specialty plastics stand to have a greater profile with Eastman operating as two units: the specialties-focused Eastman division and the commodities-focused Voridian division, which includes the world-leading PET resin business.
The downturn in the global economy forced Eastman to scrap plans to split the two sides into separate publicly held companies. The firm announced the plans in early 2001 but changed its course in November.
``What the split has done is allow us to focus exclusively on our products,'' said Phillip Griswold, Eastman's vice president and general manager of specialty plastics. ``We can still work [with Voridian] on a variety of polyester projects, but there's a much cleaner break.
``Before, it was obscured. It was tough for Wall Street or an outsider to see what [specialty plastics] was doing, because everybody wanted to talk about PET. That's what we were known for.''
The moves also have led Eastman to take a closer look at its polyethylene business, which is contained in Voridian. The firm is a sizable player in the North American low density PE market, but has a smaller presence in linear LDPE.
``LDPE is in shorter supply and can be boutique in nature and still be a cash generator,'' Ferguson said. ``LLDPE is a slightly different critter. There you're going against big plants on the Gulf Coast with full integration. In the longer term, we're going to have to take a look at our mix of LDPE and LLDPE assets.''
To date, Wall Street's reaction to Eastman's on-again/off-again split has been favorable. The firm's per-share stock price was around $38 when the split was called off, but stood around $47 on March 18.
