(Nov. 3, 2003) — When the American Plastics Council merged with the American Chemistry Council last year, there were concerns that the laser-beam focus APC had brought to plastics would diminish within the larger and more diverse ACC.
There are some troubling indications that that is exactly what has happened.
Consider this passage from a letter Dan Smith, president and chief executive officer of Lyondell Chemical Co., wrote to ACC officials Oct. 22 announcing Lyondell's resignation from ACC.
“We continue to be disappointed by the way in which the merger between APC and ACC has been implemented. The organization has lost its focus on plastics programs as envisioned in the merger [emphasis added], and we have yet to see sufficient progress in realizing the expected cost savings or other synergies.”
Smith was chairman of APC at the time of the merger, and supported bringing the two groups together.
He's not alone in raising concerns. When Huntsman Corp. became the first big chemical firm to leave ACC several months ago, it said it had not seen the “efficiencies and cost savings that we all thought would flow through the organization by virtue of the merger with APC.”
There are larger issues than APC in the departures. Huntsman, for example, said it was “extremely disappointed in the lack of meaningful support ACC has provided chemical companies on the critical energy issue, especially feedstock price and supply.”
That too has been a huge issue for plastics. Rising natural gas prices have boosted resin prices and made U.S. suppliers much less competitive globally. It's a serious charge to say that one of the industry's leading trade groups isn't doing enough.
At the time of the merger, ACC officials said they understood the concerns of the plastics industry, including the need to protect APC's long-running advertising campaign. ACC and APC have many of the same members, and while they needed to save money, they said they would protect the gains of the plastics industry.
Since the merger, ACC has been through leadership changes. Fred Webber retired and was replaced by Greg Lebedev. Smith said in an interview that he was not questioning Lebedev's leadership, and said member companies certainly bear blame that the merger hasn't worked.
The chemical industry also has been in an economic slump, which means less money for trade groups. That's the undercurrent to a lot of this debate. Member companies want ACC to make sizable budget cuts, as the companies have done.
Some then want those savings to go toward paying for a new advertising campaign to help the chemical industry rescue its image with the public. They hope to duplicate what the plastics industry's decade-long ad campaign has done.
As with some corporate mergers, bringing the two groups together looked much better on paper than in reality. Bottom line, we hope a midcourse correction on the merger still is possible, and renewed focus can be brought to the plastics side of ACC.
It's worth pointing out that processors always have considered themselves a part of APC's advertising efforts, even as they've watched from the sidelines. Let's just hope they're not watching the slow demolition of one of the industry's most important trade groups.