A. Schulman Inc. has cut 60 jobs and removed 17 million pounds of compounding capacity in an attempt to improve the performance of its North American operations.
The job cuts - representing about 15 percent of Schulman's North American manufacturing workforce - were split evenly between plants in Bellevue, Ohio, and Orange, Texas. The capacity reduction - about 6 percent of the firm's North American total - took place in Orange, where two older extrusion lines were taken out. Both moves were effective in November, company officials said at the firm's annual meeting Dec. 7 in Fairlawn.
Schulman now has cut about one-third of its North American manufacturing capacity and workforce since 2000. The firm also has reduced its dependence on the automotive market to about 37 percent of its North American sales, down from 55 percent in 2000. Packaging now accounts for 24 percent, up from 12 percent.
``We're moving away from commodities and into more engineering-type products,'' Schulman President and Chief Executive Officer Terry Haines said at the meeting.
Haines added that the Fairlawn firm's gross profit margin in North America increased by $10 million between fiscal 2005 and 2006.
The meeting also marked the debut of Michael McManus Jr. and Howard Curd as Schulman board members. They joined the board as part of an agreement between Schulman and Barington Capital Group LP, a New York investment firm that has pushed for change since it began investing in Schulman in early 2005. Barington now owns about 11 percent of Schulman's outstanding shares.
James Mitarotonda, Barington's chairman, president and chief executive officer, attended the meeting but declined to comment on Schulman or its strategy.
McManus is president and CEO of Misonix Inc., a maker of ultrasonic medical devices in Farmingdale, N.Y. He has experience in the financial sector and with the federal government, and he currently serves on the advisory board of a Barington affiliate.
At the Dec. 7 meeting, McManus said that he was looking forward to working with Schulman management, and that the company might need to diversify further beyond the automotive market.
Curd is chairman and CEO of Uniroyal Engineered Products LLC of Sarasota, Fla., a maker of Naugahyde-brand PVC-coated fabric. One of Uniroyal's units previously bought material from Schulman, but is not a current cus- tomer, Curd said at the meeting.
``I think there's a lot of potential in the technologies that Schulman is introducing,'' Curd said. ``They need to address the commodity end of the business, but I think the company is heading in the right direction.''
The main technology now being touted at Schulman is Invision, a plastic sheet for the automotive market that the company claims can match the color and gloss of a painted surface. Production of Invision-brand sheet will begin by mid-2007 in Sharon Center, Ohio. Schulman also has broken ground on a 100,000-square-foot Invision plant in Findlay, Ohio, but no start date has been confirmed.
Haines described Invision as ``the greatest opportunity to change our company.''
Schulman's North American sales grew to nearly $500 million in fiscal 2006, but sales volume in pounds declined by 2 percent. The region posted a pretax loss of $9 million.
By comparison, Schulman's European business accounted for almost 70 percent of its $1.6 billion sales total, and all of Schulman's 2006 profit of $32.7 million.
Schulman's 2006 sales were more than 10 percent higher than 2005, but its profit number essentially was flat. Barry Rhodes, the company's executive vice president and chief operating officer, said the firm is changing its strategy in the automotive market, moving more into systems designs. He displayed a prototype dashboard for a Hyundai sports utility vehicle that uses Schulman materials based on both polyolefins and thermoplastic elastomers.
Jack Taylor, general manager of Schulman's European unit, said new testing equipment installed at its Bornem, Belgium, plant has increased its profile in the packaging film market. A new deal with Fuji also has provided Schulman with opportunities in providing enhanced color for photographic paper.
Automotive uses for Schulman's materials in Europe include a glass-filled nylon engine cover for BMW and a polycarbonate/ABS overhead console for Audi Volkswagen, Taylor added.