Solutia Inc. is looking to sell or merge its nylon business but that doesn't mean the unit's employees are sitting around waiting for a buyer.
Nylon-related sales accounted for almost $1.9 billion in sales for St. Louis-based Solutia in 2007 almost 51 percent of total sales. But declining profits and more robust opportunities in specialty plastic films and glass interlayers have prompted Solutia's management team to solicit offers for the nylon unit.
``We're looking at strategic alternatives and a new structure for the nylon business,'' Americas nylon sales manager Robert Jacobs said in a recent interview at the Plastics News office in Akron.
``We're trying to reinvigorate the business for the new millennium,'' Jacobs said.
Solutia's commitment to progress in nylon is evident in plans to add nylon 6/6 resin capacity in Pensacola, Fla., in 2009. Solutia added about 160 million pounds of capacity there in 2007 and has added almost 300 million pounds of total capacity at the site since 2005.
Officials declined to specify the size of the planned 2009 expansion. As in 2007, the 2008 expansion will be accomplished by converting existing nylon fiber lines to resin production.
The Pensacola plant ranks as the world's largest nylon 6/6 production site, according to Solutia officials. The company also produces nylon resin in Greenwood, S.C., and operates a 20 million-pound-capacity compounding plant in Foley, Ala.
Rather than making a large capital investment, Solutia is opting to grow its compounding business by working with toll compounders, one each in the U.S. and China. Officials declined to identify either firm, but said that compounding ``is where we need to grow.''
Solutia which ranks as the world's second-largest nylon 6/6 maker, trailing only DuPont Co. of Wilmington, Del. also is introducing numerous new products, including a glow-wire grade that was commercialized in April. The material offers high-temperature resistance in electrical connectors for toasters, coffee makers, dryers and other large and small appliances.
``We haven't changed one iota of focus on the importance of our nylon business,'' said Craig Yeager, nylon compounding product manager. ``All of our programs and expansions are continuing forward. Our product portfolio isn't being slighted at all.
``Our board and leadership had the foresight to convert capacity from fiber to plastic. Now, we need capital to invest in the [nylon] business, and our board is looking into what can be done.''
Cable ties and fasteners are Solutia's largest nylon end market, accounting for more than half of sales. That market includes zip ties and strapping used in home building and similar markets. The firm's next three largest end markets are automotive, electrical/ electronics and consumer goods.
In the past 18 months, Solutia has sold most of its nylon resins and compounds outside of North America, partly because of higher non-U.S. economic growth and the declining value of the U.S. dollar, Jacobs said. In some cases, Asian customers are making finished nylon products and exporting them back to the U.S., he added.
Solutia recently added technical support personnel in China and now employs a total of 12 in Asia.
Like many resin makers and compounders, Solutia has been battered with price increases for raw materials, as well as for energy and freight costs in 2008.
``We've had a couple of price increases to keep pace with feedstocks, but we're three or four months behind the curve,'' Jacobs said. ``We're in the red because we can't pull increases through fast enough.
``Some of our raw materials are true commodities, so prices move up quickly, but we can't afford to be the one to get squeezed.''
Solutia operated in Chapter 11 bankruptcy for more than four years before exiting in February. The company reported a loss of more than $200 million in 2007, largely due to costs related to bankruptcy restructuring.
Sales for Solutia's nylon unit were up almost 8 percent in the first half of 2008, when compared with the year-ago period.