LyondellBasell Industries may be the world's largest maker of polyolefins, but in some ways the now privately owned firm resembles a small, local business.
``Rather than struggle to focus on the ideas of hundreds of shareholders, I can pick up the phone and find out what the owner wants and what he's prepared to do,'' LyondellBasell Chief Executive Officer Volker Trautz said at the CMAI World Petrochemical Conference. ``We can look at opportunities for reasonable price.''
Basell Holding BV's $19 billion purchase of Lyondell Chemical Co. last year created a plastics and chemicals giant with $43 billion in annual sales, 60 manufacturing sites and 15,000 employees. The firm - based in Rotterdam, the Netherlands - generates more than half of its sales from the United States.
The owner that Trautz was referring to is Len Blavatnik, the Russian-born billionaire whose Access Industries Inc. investment firm bought Basell in 2005. In 2007, Forbes magazine ranked Blavatnik among the world's 400 wealthiest people with a net worth estimated at $7 billion.
New York-based Access - founded by Blavatnik in 1986 - owns sizable stakes in Russian oil and aluminum businesses and also owns part of Warner Music Group. Blavatnik moved to the United States in 1978 and is a graduate of Columbia University and Harvard Business School. The Access Industries Web site describes him as ``a major American industrialist with global interests in three sectors: natural resources and chemicals, media and telecommunications, and real estate.''
``Len Blavatnik doesn't like to say that he's private equity,'' Trautz said. ``He says he's an industrialist who wants to build something he likes and understands - and he wants to expand and invest in petrochemicals.''
``He relates to people and doesn't want to spend a lot of time on the day-to-day business,'' Trautz added. ``Having private ownership offers us a longer time frame. We can take countercyclical action and focus on results with a value investment approach.''
Based on 2008 estimates, LyondellBasell ranks as the world's largest polypropylene marker with 12.4 billion pounds of capacity for a 12 percent market share. In low density PE, its 2.2 billion pounds of capacity earn a 5 percent global share, while in high density PE, the firm has 3.4 billion pounds of capacity and a 4 percent global share.
Using estimated North American sales, LyondellBasell is the region's largest PP maker and holds the No. 2 slot in both HDPE and LDPE. LyondellBasell is in the process of closing 825 million pounds of less-efficient PP capacity in Canada but is adding a total of almost 1.3 billion pounds of new capacity in Texas and at a joint venture plant in Mexico. The firm also recently bought PP maker Solvay Engineered Polymers of Mansfield, Texas.
Trautz - who joined Basell predecessor BASF AG in 1974 and had served as president and CEO of Basell since 2000 - is optimistic even with talk of a cyclical downturn swirling throughout the petrochemical market.
``Our industry is going through one of its most exciting periods ever as the world globalizes,'' he said. ``Look at China, where the middle class is going from 35 million to 100 million people by 2016. It's not a negative situation. The market may feel slow, but it's still of great value.''
Trautz added that LyondellBasell sees opportunities in China, where cars use 50 percent more polypropylene compounds per vehicle than their U.S. counterparts do. This could provide a boost for PP leader LyondellBasell if Chinese car sales go from 2 million in 2002 to 8 million in 2008, as predicted.
LyondellBasell - whose heritage companies include BASF, Shell Chemical, Millennium Chemicals, ICI plc, OxyChem, Arco and Hercules - is ``a perfect marriage of complementary businesses and regions,'' according to Trautz, who again cited the automotive market as an example.
``The combined company is more efficient and has better visibility in the market,'' he said. ``Our success in compounding gives us visibility in the automotive chain and lets us know what polymers we should be focusing on. We can then make changes to our manufacturing sites.''
