It's back: SBR plant in La. to re-open as EW Copolymer

BATON ROUGE, La.—The emulsion SBR plant in Baton Rouge that Lion Copolymer L.L.C. closed last December is restarting as East West Copolymer & Rubber L.L.C.

Greg Nelson, CEO of Lion Copolymer for six years starting in 2008, Horizons Up Consulting and Alto Cheung of China, along with seven other former managers at the Baton Rouge plant have signed a tentative agreement to purchase the facility from Lion Copolymer. The new owners are wasting no time in reviving the facility before the sale is concluded in a couple of weeks.

"As of this week, we're in full mode of getting it going," Nelson said Feb. 28. He and Plant Manager Bobby Rikhoff discussed the reopening at the firm's office and plant complex in Baton Rouge.

Getting the facility back in operation quickly is vital, they said, to reassure customers and secure the needed staff.

"The employees are excited (about the reopening), Rikhoff said. "They've been on hold for several weeks and months." Nelson said EW Copolymer will start with a smaller staff, "but pretty much the same employees who were here" when the site closed.

"I was personally afraid if we kept the plant down longer, we would lose a lot of that talent. We'll have people who know the plant, know how to run it," he said.

The Baton Rouge facility has two black masterbatch and two clear SBR lines, and all will be operational. With lower demand at startup, Rikhoff said two lines will be in production, and the site will be staffed to fit that level for this year.

EW Copolymer also will revive its production of nitrile rubber.

"Nitrile will be a key part of our strategy," Nelson said. "We've tried to make nitrile the last couple of years, but we're going to be more dedicated to making that grade than in the past."

The facility produced NBR for 30 years, then made it for a time for Zeon Chemicals Inc. It had a non-compete requirement with Zeon for two years after the toll agreement ended. HNBR also will be made.

Nelson said the new business will broaden its profile, offering other products and grades. "That's one of our strategies. It's difficult to be in the rubber business with just SBR," he said.

Rikhoff said under Lion Copolymer, the Baton Rouge pilot plant recently was rebuilt at a cost of several million dollars. "We want to use that," he said, to help meet customers' needs. "We think that will really help us become more valuable to our customers, and become sustainable. Otherwise we'll be a price player, not a value player," Nelson said.

A key operational strategy for the company is to become the lowest cost producer. "We've got an opportunity to do that. In a sense, we can run the plant with a lot more flexibility than in the past," Nelson said.

Rikhoff said the facility, management and staff will be right-sized to run at the lower volume, instead of 350 million pounds. Nelson said the market isn't as robust now as in the past, but when it comes back up, "we'll add a few more people and be a lot more flexible."

"We worked with the union to optimize staffing. We'll have about half the staff we used to have, at least initially," Nelson said.

"It was a union shop before, it will be a union shop again," he said, with the International Union of Operating Engineers Local 216 leadership being very supportive. "We have a temporary agreement with them and know we can negotiate a final one." A smaller amount of employees who aren't in that union also will return.

The new owners know they have to upgrade some of the capital equipment at the site and are planning to do so. Changes, including more automation, are planned to improve the facility's efficiency.

"It won't happen in day one, but in six months to a year, we'll be making some of those changes," Rikhoff said.

Another way to decrease costs for EW Copolymer involves utilities. Nelson said the company, which borders other petrochemical facilities, will buy utilities from its neighbors.

"That will decrease our costs more. You don't have to do everything yourself, especially if you don't do it well," he said. "Running steam at a small plant isn't efficient."

EW Copolymer is benefitting from a mostly stand-alone relationship with Lion Copolymer, which operates an EPDM rubber factory in Geismer, La. Nelson said there was some joint management, but the facilities never really were integrated. "It's not really a carve out. They will move their people back to Geismer."

The Baton Rouge plant has been in operation for 70 years. It was one of the early synthetic rubber factories opened following World War II, when the SR industry was created. It has had a number of owners over the years, ranging from Armstrong Rubber, Armtek, Mark IV and DSM.

Name reflects ownership, market

East West Copolymer's name is a reflection of its ownership—the U.S. owners plus China-based Horizon Up Consulting. Nelson is the majority owner, and the management team also has invested in the business.

Cenway Technologies Ltd., which operates a recently built, 50,000 metric ton butyl rubber plant in China, was a potential investor, but Nelson said the firm was unable to commit in the short window of the formation of the new company. "Usually it takes six months or more to do this sort of thing," he said.

EW Copolymer still will partner with Cenway to expand its focus in the Asian market and will sell Cenway butyl rubber in North America.

Another positive factor is help from the state government. EW Copolymer was able to take advantage of three tax incentive programs, which the Louisiana Development Corp. pushed through in record time, Nelson said.

He said all parties involved are working well together to make the revival of the plant a reality, including Lion Copolymer. That company avoids the high cost and time-consuming process of closing an SR plant, which is subject to stringent government regulations.

Nelson and Rikhoff have been visiting key customers to gauge how their reaction to the potential restart of the business.

"I wanted to know how they felt about this. Had they written us off?" Nelson said. "Everyone we talked to was disappointed we were not going to be in the market. We've had 40-, 50-year relationships with some of these guys. They know the product, the product runs well in their operations, and they just didn't want to see that happen."

Nelson said he came away from the customer tour more motivated than ever. "I was convinced we had to do this, we can do it, can make it a profitable, viable place. Not just for its employees, but for the marketplace."