(Jan. 15, 2006) — If GE Plastics gets a new owner, the unit is bound to see some big changes. Let's speculate, for a moment, on what might be in store:
* The name itself is the first and obvious. GE Plastics is one of the best-known names in the plastics industry, but it would have to change immediately.
If a financial buyer takes over, we'd expect something like Lexan LLC — why not stick with the company's most famous brand?
But Lexan polycarbonate is a small part of the total company. So a new owner — at least one without a well-known name in the industry already — might instead choose to start with a clean slate. Any recommendations?
* Management training and succession would change, too. We're so used to the way things work at GE now, it's hard to imagine how much this change would mean to the corporate culture.
Cutting corporate ties with General Electric Co. would mean an end to shuffling executives to and from plastics from GE's many unrelated businesses, including medical, lighting, appliances, broadcast — you get the idea. That's something that has made GE Plastics unique. But it almost certainly would end.
* A new owner might be tempted to break up the company. Would you keep the LNP Engineering Plastics business? ABS resins? Structured Products (the sheet and film unit)? Polymerland resin distribution? Polymershapes?
Maybe they still belong together, and certainly there are synergies to the operations. Some of these businesses are leaders in their markets, or at the very least have significant value.
Still, some would look very good in the portfolio of another company that wouldn't necessarily have the interest, or financing, to buy all of GE Plastics. A financial buyer, especially, might look for opportunities to sell pieces of the company for a good price.
* GE has been reluctant to make big changes to its manufacturing footprint in plastics, but a new owner might close or relocate some plants — especially if a current competitor is involved.
This is all just speculation, of course. Maybe GE will keep the plastics business. Maybe a new owner would try to keep things stable, so customers (and competitors) would see very few differences. If the company is sold, a lot would depend on the buyer, and the management, and right now we don't know the answers to those questions.
Most of the speculation now is on financial buyers. The plastics industry is loaded with those types these days. If your company isn't owned by an investment firm, chances are that some of your competitors are, and certainly some of your suppliers and customers. They come in all types, and a lot of the differences depend on the fiscal health of the companies they own.
GE Plastics is a profitable company — perhaps not as profitable as Wall Street would like, but in the cyclical chemical industry it's still a plum that nearly anyone would like to own.
