On his first day in charge at PolyOne Corp. in 2006, Stephen Newlin wore a red tie. He wore the same tie on his last day — May 15. That might have been the only thing that was unchanged at the Avon Lake, Ohio-based firm in the eight years that Newlin ran the show.
“Conditions weren't attractive when I got here,” he said on May 15, just a few hours after officially retiring from the firm and handing over the job titles of president and CEO to Robert Patterson. “It wasn't a home for happy employees,” added Newlin, who will continue to serve as chairman of the firm's board of directors.
The 2000 merger of materials firms Geon Co. and M.A. Hanna Co. that created PolyOne had not gone according to plan for a variety of reasons. As a result, the firm had lost almost $300 million in its first five years of operation. Annual sales fell from $3.1 billion to $2.2 billion in that span.
“I knew I was expected to change the culture here, and, coming from a customer-focused background, I knew you had to treat customers well,” said Newlin, who had spent 23 years with water treatment chemicals firm Nalco Chemical Co., as well as a shorter stint at sanitizing products supplier Ecolab Inc.
“Your culture starts around the customer,” he explained. “There had been a desire here to please customers, but there wasn't the know-how. We were creating orders but not value.”
Newlin got his first impression of the size of the challenge when a customer survey showed that PolyOne was making on-time deliveries only 81.2 percent of the time. That number might seem low, but it was right in line with the industry average of 81.6 percent.
“People were OK with that delivery rate, because we were right in there with our competition,” Newlin said. “I said we could fix it. We set a goal of 95 percent and we got there. We made people accountable.”
Another problem Newlin identified at the outset was a lack of defined roles for PolyOne's executives and employees.
“We had to change the mindset from being a volume house to value creation,” he said. “You would walk around our locations and still see people wearing different logos [from Geon and Hanna] six years later.
“It wasn't a good self-image. We were making things difficult for ourselves. There was no vision or plan, and we weren't working for a defined purpose.”
Early on, Newlin made the tough decision to sell PolyOne's minority stake in PVC maker Oxy Vinyls LP to partner Occidental Chemical Corp., and to use some of the $261 million in proceeds from the sale to pay down some of PolyOne's large debt load.
“The cost of money was high, and we didn't have a good credit rating,” Newlin said of that move. “We had better things to do with our money.”
He added that PolyOne's board was very supportive of the sale of the Oxy Vinyls stake.
“Some of them asked why we hadn't done it sooner,” Newlin recalled.
But Newlin pointed out that paying down debt wasn't the only thing that PolyOne did with the Oxy Vinyls money in 2007 — the firm also used some of that amount to purchase GLS Corp., a thermoplastic elastomer compounder based in McHenry, Ill. That move allowed PolyOne to take its first step toward having a specialty focus in the materials market.
Shortly after those deals, however, markets worldwide were hit by the recession of 2008. That kind of event hadn't been listed in Newlin's PolyOne CEO manual. The ensuing tough times led to PolyOne closing nine plants and eliminating more than 500 jobs between mid-2008 and the end of 2009.
“We had just gained some confidence, just got some momentum and then we had the recession,” he said. “Housing was our biggest market and it was collapsing.
“Things were scary. It was a good thing we paid down debt and bought GLS when we did,” he said.