Lyondell Chemical Co. and Chevron Phillips Chemical Co. LP have resigned from the American Chemistry Council. The companies are questioning whether the group effectively is leading the industry, and Lyondell is voicing unhappiness over how ACC's merger with the American Plastics Council has worked out.
The resignations come several months after Huntsman Corp. gave similar reasons for leaving ACC, and certainly will increase the financial pressure on the chemical and plastics industry's largest trade group. Houston-based Lyondell cited concerns with ACC's priorities, governance and efficiency, and noted ``continued disappointment'' with how the ACC/APC merger has been implemented.
Chevron Phillips, also based in Houston, said ACC needs to improve its efficiency and advocacy work, but the company did not mention the APC issue in its Oct. 23 news release.
Arlington, Va.-based ACC is in some turmoil. The group had been contemplating sizable budget cuts, even before the resignations. As it looks for cuts, the group also is trying to find money to launch an expensive program of advertising to boost the chemical industry's public image.
The turmoil raises questions about what will happen with the plastics industry's long-running advertising campaign.
At a meeting Oct. 26, ACC officials planned to debate budget scenarios and whether the group can afford to spend an estimated $10 million to $20 million a year for a chemical industry image campaign. That campaign would be modeled after APC's long-running advertising effort.
Lyondell President and Chief Executive Officer Dan Smith said in an Oct. 23 telephone interview that if ACC streamlined operations, it would have enough money to support a broad advertising campaign.
But he said chemical and plastics manufacturers can't afford to simply ``double up'' on spending to support the campaign, without other changes in ACC operations.
He also said that any attempt to integrate the chemical and plastics advertising campaigns, as some ACC officials have suggested, would have to be done carefully.
ACC Executive Vice President Rod Lowman said Oct. 23 that no decisions have been made on ACC's campaign. The APC/ACC merger has produced ``millions of dollars'' of cost savings, he said, but there are obviously questions from members about how the implementation has gone.
Lowman said he could not say specifically what the financial impact of the departures will be, but he noted that Lyondell is one of the top five dues payers to APC, and its departure will be felt by both ACC and APC.
``It's significant, but it's not fatal to either organization,'' Lowman said.
Smith said Lyondell spends several million dollars a year on dues to ACC, including to APC, and Salt Lake City-based Huntsman said it spent more than $2 million.
Lyondell and Chevron Phillips said they would be open to returning to ACC if there is movement toward streamlining the group. Smith said Lyondell remains committed to trade organizations and working actively with other chemical companies.
Smith had been chairman of APC at the time of the merger, and was a proponent of bringing the two groups together.
