In Steve Newlin's world, customers come first.
They also likely hold spots two through 10 on his list of priorities as he takes the reins at PolyOne Corp., the Avon Lake, Ohio-based firm that ranks as North America's largest compounder. Newlin, 53, joined PolyOne in February after a three-year stint with Ecolab Inc., a specialty chemical maker based in St. Paul, Minn. Prior to Ecolab, Newlin spent 23 years with Naperville, Ill.-based specialty chemical maker Nalco Co.
Newlin enters PolyOne at a pivotal point in its brief history. The firm was launched with great expectations in 2000 when compounders Geon Co. and M.A. Hanna Co. merged. But a manufacturing slowdown and internal challenges have prevented the firm from reaching its potential. In its first five years of operation, PolyOne lost almost $280 million as annual sales fell from $3.1 billion to $2.2 billion.
But Newlin, a South Dakota native, sees brighter days ahead, as evidenced by PolyOne's first- quarter 2006 results. The firm posted a profit of almost $49 million - its best-ever first-quarter showing.
Newlin recently sat down with Plastics News at PolyOne's Avon Lake headquarters to talk about what the future may hold.
Q: What's the biggest challenge facing PolyOne? Raw material costs? A smaller North American manufacturing base?
Newlin: Both of those are challenges, but they're not the biggest challenges we really face. Our biggest challenge is to get customer focus and help our customers be more successful and grow. There's nothing we can do that impacts our performance more than that. So that's what I'm trying to get my arms around.
Internally, I've already talked to our employees about being more customer-centric and really defining what that means. It begins with listening to and understanding our customers better and getting closer to them, calling on them more frequently and asking the right questions. Really trying to understand their business better, including their business economics, and even their end customers. That's how we can best provide solutions, when we really immerse ourselves in our customers' business and are thought of as being part of their profit stream and revenue stream.
So that's what we're trying to do, and there are a lot of ways in which we're trying to add a service component to our business, whether through innovation or unique formulations or through absolutely superb delivery services. Or by helping lower [customers'] energy costs or improve their quality and throughput. Those are the kinds of things we have to do rather than just being a resin supplier or formulation company.
Q: Do you see PolyOne being more market-focused or product-focused? For example, would a packaging team sell all of PolyOne's products to the packaging market?
Newlin: We don't know the answer to that yet. We've got a lot of market intelligence work to do before we can get there. Customers are really focused heavily on this, and we're going to listen to their vote. But we've done some different things in these areas in the past that weren't successfully executed. What I have to understand is: Was that a problem in execution or was it the wrong strategy? So we're studying and trying to understand right now what makes the most sense. I suspect it may be little bit of a hybrid in the end.
We're doing some work right now that may be hybrid. We have some key accounts where we've named a commercial leader to handle those key accounts, to represent all of PolyOne to those markets.
Q: If that hybrid model evolves, would it be on an account-by-account basis or based on geography?
Newlin: I think we're at different stages around the world and have different degrees of development. Our customers have different needs and sophistications as well.
Q: It sounds like it will be more case-by-case.
Newlin: What it's all about is really getting more specialized and getting a better understanding of our customers' business needs. The challenge of going market-specific is that you have to be careful, because you need people [on your staff] that know color, that know engineered materials, that know all we have to offer and that know the customer well enough to create value. At the same time, they have to have the knowledge to differentiate us. You can make a case either way. It just comes down to which will you be able to execute better.
Q: PolyOne's product application seems more specialized already, based on the new products you showed at NPE.
Newlin: I think it's an early step, and these things take some time and some focused effort on our part. It goes back to market intelligence, where these products are headed and what our customers' needs are down the road. Not just where they are today, but sort of anticipating and then developing a value proposition for these products and services that makes sense for where our customers' businesses are heading.
Q: It's almost like you're putting product application and research and development back onto customers, as far as direction is concerned.
Newlin: I think we'll take the lead from them and work on R&D efforts that are both unique and that are able to be leveraged.
Instead of just doing an R&D project for one customer, we have to do one for groups of customers and one that the market can understand. We need to find areas where we can help our customers more and better reward ourselves and our shareholders.
Q: It's probably harder to find a niche with a company of PolyOne's size.
Newlin: We have to understand the size of the niche better, and what's the degree of profitability. How comfortable are our customers and their customers, and will they reward us for that? Do they need our services? That's how we'll look at things in the future. We really need to define the segments and subsegments that are out there.
Q: Are there some parallels between your previous work experience and some of the things you're looking at with PolyOne?
Newlin: Both Nalco and Ecolab are outstanding specialty chemicals companies that have done a terrific job with customers. I think I've had the great fortune of learning ways to connect better with customers, what customers expect from business partners, how to connect and develop uniqueness and a strong value proposition. That very much applies to what PolyOne is doing.
Also, there was the global aspect of [Nalco and Ecolab]. I was fortunate to lead Nalco's business in the Far East in the early-to-mid '90s. Then I led [Nalco's] business in the Netherlands for four years, running businesses in Europe and the Middle East. I got some great global experience there, and with PolyOne being a global company and having good-sized operations in Europe and needing to expand through Asia, that's very useful.
I also don't believe in being a specialist CEO. It's a leadership role, and the broader your experience is, the better. And coupling that with leadership skills and understanding how to energize an organization and take an organization to its full potential is the biggest challenge a CEO faces today.
There are examples in corporate America today of people transferring to businesses they don't know a lot about. At 3M, at Hewlett-Packard, people are doing terrific things with different backgrounds. There are some connections, but they're different companies. What's most important are the leadership skills you bring.