BATON ROUGE, La.—If it´s core, you dote on it, caress it, put money into it and make sure it performs.
If it´s non-core, you do little or none of the above, and put out the "for sale" sign.
That´s the difference between the SBR business today known as Lion Copolymer L.L.C. and the same operation a year ago, then called DSM Copolymer Inc. For several years parent DSM N.V. classified the Baton Rouge operation as a business earmarked for potential divestiture, as the Dutch parent focused on its own core business, life science products and performance materials.
Treading water ended when Lion Chemical Capital L.L.C. bought the SBR producer in 2005. The business known as "Copo" for 63 years now is back to being "core" and doing the things expected with that label.
Paul Saunders, president and CEO of the business since Lion Chemical purchased it, won´t bad-mouth the previous owner. However, he openly describes how the $200 million rubber supplier is operating today, what management wants to achieve and the importance of being valued.
"If you´re a core business, you do a really good job of taking care of the core," Saunders said. "If you´re non-core, and the operation is trying to sell you off, it´s less pleasant."
Investing in the plant
In the past year Lion Copolymer has invested $3 million in capital improvements in the plant. The money went into technology, improving process controls. The firm added advanced trays in two of its stripping columns, and reopened its pilot plant, which had been closed as a cost-cutting measure under DSM, according to P. Dodd May, vice president of sales and marketing.
Saunders said he´s pleased at how the firm has progressed since the sale.
"The plant´s running better today. We´re learning; we´re gaining," he said. "Restoring the reliability and the capability of the facility was high on our list."
The rubber factory has the capacity to produce in excess of 360 million pounds of SBR annually. A few production problems, training of personnel and installing new technology held Lion Copolymer from reaching that level, Saunders said. "We´re not where we´re going to be, but we´ve made progress."
Despite a couple of production issues in the past year, the quality of the product turned out in Baton Rouge has been excellent, May said. "The off-spec rates have been very low," he said. "And customers have reacted positively to the ownership change."
May said for most of the firm´s customers having a domestic source of SBR is important. "We´ve really been in continuous production longer than any other producer in North America," he said.
Typical of companies in the SBR business, Lion Copolymer obtains about 70 percent of its sales from tire manufacturers and related companies, including retreading. "We have the unique capability of black masterbatch tire grades," May said. "The majority of our sales are actually proprietary grades, so in some sense we´re insulated from the ups and downs of the general market for emulsion SBR."
That business has been growing. May said the hyper-competitive nature of the tire industry means tire makers are very active in compound and material development. "We can tailor the product to meet certain requirements."
May said most other participants in SBR offer strictly generic grades-which Lion Copolymer also makes-particularly foreign sources of material. Little SBR is coming into the U.S. from the Far East these days, and Lion Copolymer isn´t interested in making a quick buck by exporting to China.
"We feel our strength is here in North America. Export markets come and go. We really concentrate on trying to build in North America," he said.
May said Lion Copolymer increased its share with most of its major accounts for 2006.
Investing in people
An important change at Lion Copolymer is the investment the company is making in its people, Saunders and May said.
In 2003 DSM Copolymer laid off 40 people at the facility, which left the company lacking in experienced, trained personnel in some areas. "The first line of supervisors weren´t in those positions prior to 2004," Saunders said. "So it´s a matter of really getting those guys up to speed."
Historically, operators advanced strictly by seniority at the Baton Rouge plant. Saunders said that was changed, and operators now can get training from a local junior college, of which the company pays for about 75 percent of the cost.
"Using qualifications instead of strict seniority is a big deal," Saunders said. He said the employees and the unions that represented them-there are five at the facility-embraced the new approach, which guarantees a well-trained, well-skilled staff.
"It´s a change in culture. And quite frankly, it helps everybody´s job security," he said.
May said that since the operators mostly are younger employees, the company´s willingness to invest in their further training demonstrated it is serious about the business.
Morale remains good at the operation, according to Saunders. One of the reasons for that is the emphasis on safety.
The company isn´t just mouthing the safety message, it´s serious, the executive said. Lion Copolymer recently passed a year without a lost-time accident, and its recordable incident rate is three times less than it was a year ago.
Saunders said safety starts with the supervisors, who have to buy into it. "You have to daily and consistently walk the talk in that area. If management takes a short cut, the easy way out, it ruins your credibility."
He said that every injury is preventable, and the expectation is that everyone goes home in the same condition they were in when they arrived at work.