Although PolyOne Corp. continues to sail through some choppy financial waters, the Cleveland-based plastics compounding leader sees demand picking up and expects next year's costs savings to be much larger than what was predicted when the company was formed in 2000.
``We're seeing improvements in the commodity cycle and we believe we've seen the bottom of the economic cycle,'' PolyOne Chairman and Chief Executive Officer Thomas Waltermire said at the firm's annual meeting, May 23 in Cleveland. ``We're increasingly confident that what we're seeing isn't just a seasonal increase, but that it's more fundamental.''
Those improvements have not affected the bottom line yet for PolyOne. Adoption of a new accounting standard turned a $7 million profit into a $57 million loss in the first quarter of 2002.
PolyOne's performance plastics unit, which generated about 70 percent of the company's first- quarter sales, saw sales dip 13 percent when compared with the same quarter in 2001. Sales in PolyOne's resin distribution business essentially were flat.
The first-quarter report came on the heels of a 2001 year in which the firm lost $46 million as sales fell 15 percent to $2.7 billion. But Waltermire was undeterred in anticipating savings of $200 million from the Geon-Hanna merger by next year - a total that's roughly triple the savings level hoped for when the deal was made.
``This improvement will be a great source of earnings growth,'' he said.
Some of the savings will result from PolyOne's closing of 18 plants and elimination of 600 jobs by the end of this year. PolyOne is installing new equipment or modernizing old equipment at its remaining sites, resulting in a total capacity that will be higher than it was before the restructuring.
PolyOne has been quiet on the acquisition front, but Waltermire said the firm still has an eye toward growing by this method.
The company also is consolidating its research and development staff into a new, 35,000-square-foot lab site that will open later this year at the company's Avon Lake, Ohio, site. The new site will join PolyOne's 25,000-square-foot vinyl development center in Avon Lake, which will continue to operate.
Of the 40 scientists to be employed at the new center, 20 will be relocated from R&D sites that were closed in Farmingdale and Burlington, N.J.; Bethlehem, Pa.; Norcross, Ga.; and Niagara Falls, Ontario, as part of the restructuring. Some equipment from those sites also will move to Avon Lake.
