When Bernard Claude is asked a question, he often answers by repeating a part of the question. He does this, presumably, to organize his thoughts. It's obvious he was trained as a mechanical engineer.
Claude takes that same approach when talking about the long-term prospects of Total Petrochemicals USA Inc., the Houston-based plastics and chemicals maker that named him its president and chief executive officer in February.
``We have a strong belief in the future of refining and base chemicals and plastics,'' Claude, 53, said during an April 15 interview in Houston. ``Plastics still have a tremendous future because of their versatility.''
Claude now heads a business that ranks among North America's five largest makers of polypropylene and polystyrene and has a healthy presence in high density polyethylene as well. Total Petrochemicals USA racked up sales of $7.5 billion in 2004 - a jump of almost 42 percent vs. 2003 - and employs more than 1,600 in the United States.
The business is part of Brussels, Belgium-based Total Petrochemicals, a unit of Total SA of Courbevoie, France, which is the world's fourth-largest oil company.
Before taking the reins at Total Petrochemicals USA, Claude was president of Total Petrochemicals' PE business in Brussels. He began his career with PetroFina - a French oil firm Total merged with in 1999 - in 1976 as a drilling and production engineer in the North Sea and parts of Africa. Claude compares the decision of his parent company with one made by Exxon Mobil Corp., which has stated long-term commitments to plastics and chemicals. In contrast, BP plc has spun off its similar businesses into a separate company - Innovene - and Royal Dutch/Shell and BASF AG are looking to sell Basell Polyolefins, their joint venture that leads the world in PP production.
``Total and Exxon Mobil both see a lot of synergies with their chemicals business and their refinery business,'' Claude said. ``What BP and Basell have done is a different reaction.''
Last year was rewarding for Total's base chemicals and polymers business, including Total Petrochemicals. Sales were up 30 percent to 10.3 billion euros ($13.4 billion), while operating profit skyrocketed to 490 million euros ($637 million) - a figure almost five times larger than its 2003 level.
But challenges remained, mostly in the form of higher raw material costs, even for a firm as back-integrated as Total Petrochemicals.
``Even though we've increased our [resin] prices, our margins really have not improved as much as our customers may believe they have,'' Claude said. ``And this all came out of two or three very difficult years.
``It's a world market now, and demand in Asia has a direct impact on the U.S. and Europe. I hope we've learned from the past, when we've been quite good at overbuilding.''
Total has no plans to expand its 1.7 billion-pound PS capacity in Carville, La. - part of the world's largest PS/styrene complex - or its 900 million-pound HDPE output in La Porte, Texas. It increased capacity at its 2.2 billion-pound PP plant in La Porte - the largest of its kind in the world - by 10 percent through a pair of debottlenecking projects in 2004.
``In the U.S., we're not building oversupply on the resin side,'' said Claude. ``We're being very reasonable about not building new lines.''
A bigger concern, in Claude's view, is the growing amount of finished plastic products making its way into North America, primarily from Asia.
``Bringing in finished products has the same impact on us as bringing in resin would,'' he said. ``It's very easy to transport film, although that can't be done with pipe or carpet.''
Improving and increasing interaction with customers is another of Claude's goals. He took a step in that direction recently when he spent two days with carpet producers in Georgia.
``We have to have better conversations with our customers,'' he said. ``The situation with pricing has subjected us to a lot of time-consuming negotiations, but we also have to listen to them when they tell us what they want. We can come up with a new catalyst to make a more transparent film, but ultimately the customer will tell us what the market is.
``Customers also want some stability in the market. They can cope with higher prices, but not with the ups and downs.''
Competition also will continue to motivate Total. Even though there's been a long-term trend toward consolidation in commodity plastics, Claude pointed out that because no market buyer expressed interest in the PP units of Basell or BP, the result likely will be two new players in the market.
Dealing with the U.S. railroad network also is an increasing challenge. Claude described the rail-car-dependent resin delivery system as ``slow, complicated and very expensive.''
``If you do a world benchmark of logistics, you see that the U.S. is a very difficult place to work,'' he said.
``It's difficult to get quick delivery to our customers.
``The railroad needs to improve its efficiency in getting cars back. Now, a car goes someplace and stays for two days, or it gets split and some of its shipment goes to New York and some goes to California.''
Claude added that he's happy to be in Houston, where Total will move from a location near George Bush Intercontinental Airport to a new downtown site by the end of the year.
The relocation will allow Total to grow its Houston work force by 10 percent.
``The knowledge [in Houston] is fantastic,'' Claude said of his new home.
``There are no better [production] sites. They came up on budget, on time, and a year later they were operating above capacity.
``The people's combination of enthusiasm and expertise is quite fantastic. I really enjoy it here,'' he added.