If you're buying plastic resins from Dow Chemical Co. in North America, all roads lead to Pedro Suarez.
Suarez, 53, was named Dow's North American commercial vice president for plastics in early February. A 25-year Dow veteran, Suarez had spent the past four years in Zurich as the firm's area commercial vice president for polyolefins and elastomers in Europe, the Middle East and Africa, as well as country manager for Spain and Portugal. A native of Argentina, Suarez recently relocated to Houston.
In his new role, Suarez has oversight in North America for sales, marketing, customer service and pricing for Dow's polyethylene, polypropylene, polystyrene, engineering plastics - including polycarbonate and ABS - and wire and cable product lines. Dow is a North American market leader in both PE and PS.
Suarez arrives at his new position at a somewhat difficult time, as demand for PE, PS and ABS each were down in the region last year, while growth rates for PP and PC each were well below the averages of recent years. At the same time, raw material costs for feedstocks such as natural gas and benzene have climbed, eating into profit margins as resin price increases have failed to keep up.
``The good news is that, from the demand side, things are improving,'' Suarez said in a recent telephone interview. ``First-quarter growth [of North American plastics] was around 5 percent, maybe a little higher for some materials.
``But from the cost side, things are not better, and for some products they're actually worse.''
Regarding North American PE demand, Suarez said Dow is ``very positive'' about the film market, which is a major PE end market.
``If you look back to the last few years [in the film market], the economy hasn't helped us,'' he said. ``Now the big difference is that the demand is there.
``Tremendous consolidation has taken place in the U.S. [film market] already, and if you talk to the big converters, they believe that consolation will continue and that the market will remain very competitive.''
In PP, Suarez said the availability of propylene monomer ``is going to be a significant issue'' that could affect PP production. In PS, Dow plans to focus on ``unmet needs'' in the food and specialty packaging segments, according to Suarez.
Moving ahead, most demand for new North American resin capacity will be met through debottleneckings, rather than by more costly plant expansions or new construction, Suarez said.
``We're doing things with technology to get more production out of our existing lines that we couldn't do three or four years ago,'' he said.
Changes at Midland, Mich.-based Dow have been intense in the last 18 months. In December 2002, William Stavropoulos came out of retirement to replace Michael Parker as the firm's chairman, president and chief executive officer. Stavropoulos - who had served as Dow's CEO from 1995-2000 - then set out to improve Dow's financial picture by closing several facilities, cutting 3,100 jobs and reducing annual costs by almost $400 million.
Those moves have helped bring about a dramatic turnaround at the firm. After losing almost $340 million in 2002, Dow turned a profit of more than $1.7 billion last year as sales rose 18 percent to $32.6 billion.
Plastics sales - from Dow's plastics and performance plastics units - contributed 48 percent of Dow's sales and 55 percent of its pretax earnings in 2003. Sales in those units were up a combined 14 percent last year. Wall Street also has taken notice.
Dow's per-share stock price was around $30 in early 2003 but stood around $41.30 in early trading April 22.
Dow announced major staff and organizational changes in December 2003 and January 2004. One of those changes has resulted in Dow's plastics unit offering its entire portfolio to customers, rather than having individual sales reps for each of its various resins.
Suarez said the plastics unit is ``still in the middle'' of the reorganization. He declined to offer details of how the plastics business was affected by the job cuts, but said that the main objective of the project is ``to be more efficient to our customers.''
``When we think about our customers in North America, we want to make sure that we're growing with those customers in any way we can,'' Suarez said. ``But we also have to keep a proper focus so that we're making money on all of these products.''