In its second year as a privately held firm, resin distribution leader Nexeo Solutions has high hopes for the medical and automotive end markets.
“Automotive has been very strong this year, and medical is still very strong from an end-market perspective,” said Vaughn Deasy, North American plastic sales vice president, in a recent interview in The Woodlands.
“Those are the two specific end markets that we've chosen to be more involved with,” he added. “We're involved more upstream in medical in application development. It's a good market, but you have to have patience.
“That's how things have evolved. As a distributor, we're not just a logistics provider anymore. We're involved as much as anyone.”
“Automotive was the first end market we chose to be more involved with,” added product management Vice President Jim Harris. “That was over a decade ago. Then once the economy bounced back, we've chosen to target medical for the last two or three years.
“We've got a lot invested in those markets as far as staff and resources and technical resources.”
It's been more than 18 months since private equity firm TPG Capital announced its $930 million purchase of the global distribution business of Ashland Inc., which it then renamed Nexeo Solutions. The business had sales of almost $2 billion for the six-month period ended March 31, with 42 percent of that amount coming from plastic materials. The remainder of sales came from chemicals and related products. About 85 percent of sales in that six-month period were in North America.
Late last year, Nexeo formed a joint venture with Chinese distributor Beijing PlasChem Trading Co. Ltd. Nexeo owns 60 percent of that venture.
In addition to the new name, TPG relocated the unit's headquarters from Dublin, Ohio, to The Woodlands. That move included Harris and more than 30 other executives.
Nexeo now distributes thermoplastic materials from almost 30 suppliers of commodity and engineering resins and compounds, including ExxonMobil Chemical Co. and Sabic Innovative Plastics. Nexeo operates from more than 140 warehouses worldwide, including more than 130 in North America. The firm also operates its own private fleet of trucks, tankers and trailers totaling almost 1,000 vehicles.
“We've had some changes in our line cards these last few years, but we're now aligned with industry leaders and key markets served,” Harris said. “We might want to add some more to our specialty mix, but we're really pleased with how things turned out.”
In the first half of 2012, Harris said engineering resin sales did well for Nexeo. Through May, the American Chemistry Council reported that sales of polypropylene and low density polyethylene via distribution each were up at least 4 percent, but that distribution sales for polystyrene and high density and linear low density PE each were down at least 8 percent.
Nexeo could benefit from ongoing shale gas developments that have increased North America's supply of natural gas. Those developments have prompted several petrochemicals firms to announce capacity expansions for both ethylene feedstock and PE resin.
“We sell a lot of polyethylene, and the outlook is rosy for markets that consume polyethylene, said Deasy, who joined Nexeo late last year after spending more than 20 years with LyondellBasell Industries, a maker of PE and related products. “Shale gas is going to increase [PE] supply for producers, and they're going to be looking for plenty of help in selling that supply.
“The ethylene molecule in the U.S. is going to be very competitive, and it's the biggest building block there is,” he added. “In the U.S., there are unique things you can do with low-cost ethylene.”