Where image is concerned, the plastics and chemicals market might be more successful with a low-key approach.
At the DeWitt & Co. World Petrochemical Conference, held March 21-22 in Houston, Lyondell Chemical Co.'s Dan Smith said that although the long-running American Plastics Council ad campaign ``greatly improved the image'' of plastics while the TV commercials were on the air, approval ratings fell when APC cut its ad spending.
``Plastics are very identifiable and the ads were emotional and easy to connect with,'' said Smith, who has been chief executive officer of Houston-based Lyondell since 1996. ``It's hard to do the same for the broader chemical industry.
``We need to spend more time with our employees and make sure they're educated. We need to engage with schools and neighbors. We can have more impact there than spending $40 million to get someone's attention with a TV ad.''
Lyondell reported sales of $22.2 billion and profit of $735 million in 2006. The firm's Equistar Chemicals LP venture is North America's second-largest producer of high and low density polyethylene and the region's fourth-largest maker of linear LDPE.
Recently, Lyondell announced plans to build a major plant to make propylene oxide and plastic feedstock styrene monomer in Ningbo, China. The plant - set to open in 2009 - will be a joint venture between Lyondell and Sinopec Zhenhai Refining and Chemical Co. Ltd. of Beijing. It will have annual capacities of 1.3 billion pounds of styrene and 600 million pounds of propylene oxide.
With many market watchers expecting the petrochemical market to move out of a peak period, Smith added that it's important to keep recent events in a historical perspective.
``In spite of all the angst and hoopla, ethylene continues to chug along,'' he said. ``It's important to look at history, but we're our worst enemy when it comes to drawing a straight line to predict the future. Twenty years ago, we said the Germans and Japanese would shutter every factory in the country. Then it was [South] Korea, Taiwan and Mexico. In our industry, we act as if it's feast or famine. When it's good we're looking for the next downturn, and when it's bad we're looking for the next peak.
``But cyclicality can provide opportunity,'' Smith added. ``There are different opportunities at different times and smart people can take advantage of that. Global demand is continuing to grow. When people get to a certain standard of living, they use products that use chemicals.''
The industry also is facing a challenge on the people side, with 35 percent of the skilled workforce in engineering and construction expected to retire in the next five years, Smith said. Regulatory issues and a lack of new U.S. oil refining capacity also could provide obstacles.
Smith is keeping his chin up.
``We define success not just by building plants but by generating value,'' he said.