International Specialty Products Inc. has high expectations for its ISP Elastomers L.P. emulsion SBR business, particularly for its specialty lines.
The diversified chemical company entered the SBR field last year when it bought certain assets of Ameripol Synpol Corp. for $1 million and the assumption of $4.6 million in tax obligations during the synthetic rubber producer's Chapter 11 bankruptcy protection process. With the purchase, ISP took over Ameripol Synpol's Port Neches, Texas, SBR plant on July 31.
The relatively low price was one of two reasons ISP bought the financially struggling facility. The other was that ISP CEO Sunil Kumar and Mel Martin, general manager of ISP Elastomers, had roughly 60 years combined tire experience at Firestone Tire & Rubber Co. and successor Bridgestone/Firestone.
``It was financially compelling. We didn't pay very much,'' said Pierre Varin, global marketing director for ISP Elastomers' specialty products unit.
Plus the bulk of the SBR output goes to tires, and Kumar and Martin know all the big players in the tire industry, said Varin, who discussed the business at the Adhesive and Sealant Council spring meeting, held April 18-21 in Cleveland.
Although ISP acquired the Port Neches plant on the cheap, it clearly is poised to invest heavily in the factory to bring it back to industry standards. ISP, which reverted last year to a private firm from being publicly held, provided $40 million in startup funding and working capital, and has allocated $25 million for capital investments over the next three years.
``We have 60 capital programs going on right now,'' Varin said, ``ranging from tens of thousands of dollars to million-dollar projects.''
The operation itself is quickly coming up to speed after being in worse shape than expected. ``No matter how good of due diligence you perform, you always uncover some things you didn't count on,'' Varin said.
Ameripol Synpol produced about 250 million pounds of SBR in 2002, its last year of full operation. ISP manufactured just 52 million pounds after taking over last year, but now has monthly production levels up to 30 million pounds, on line to top 300 million pounds and more than $100 million in revenue this year. Long term, it plans to produce 450 million pounds a year at the facility by 2007.
About 75 percent of the 250 workers laid off when Ameripol Synpol shut down the operation have been recalled, a number the ISP marketing director expects to remain constant.
ISP will commit the Port Neches factory to adhering to corporate ``best practice'' standards, which are high because many of the firm's products are for pharmaceutical applications. It also will try to leverage the synergies of the specialty elastomers with the core ISP specialty polymer chemical business, with salespeople offering all lines on calls to potential customers.
It is on the specialty side, in fact, where ISP Elastomers hopes to shine. Varin said while commodity usage for tires and other hard rubber goods accounts for as much as 90 percent of volume, the specialty lines for such products as adhesives and sealants are responsible for more than half of the firm's profits. It also is seeking to boost production of specialty hot polymerized SBR by 50 percent over the next two years to nearly 45 million pounds annually.
``My charter is to grow the specialty piece of SBR,'' Varin said. ``Realistically, the market for specialty will not be gigantic. If we reach 20 percent of volume from the plant, that would be fantastic.''
Varin has been with ISP for six years and still is learning about the intricacies of the rubber industry, but he has high hopes for ISP Elastomers.
``It certainly is a different world in terms of pricing and being a commodity than some of our pharmaceutical businesses,'' he said. ``So far it's been very enlightening. It's a business that's going to do very well for ISP.''