Cabot CEO sets firm on growth path

BOSTON—Most of 2015 was difficult for virtually all carbon black producers. A vast majority had to tighten their belts and make cutbacks because of a poor economic environment and other factors.

For Cabot Corp., that meant cost reductions and restructuring actions in fiscal 2015. While the economic challenges haven't disappeared in several regions across the globe in 2016, the company's top executive believes the firm is back on a growth course.

Sean D. Keohane became president and CEO of the Boston-headquartered global specialty chemicals and performance materials company in mid-March after Patrick M. Prevost stepped down from the posts on March 11. Provost, who continues as a member of the board of directors, suffered a minor stroke in 2015 and remained on leave before he resigned from the president and CEO posts.

Despite having only served in the top positions for less than a month, Keohane fielded questions dealing with Cabot and the carbon black industry with ease recently. He joined Cabot in 2002 and since then has held a variety of management positions before he assumed his new posts.

“I am very excited about my new role at Cabot Corp., because I already know first-hand what an exceptional company Cabot is,” the executive said. “Cabot is over 130 years old, with a strong brand, a strong pipeline of new products, a legacy of innovation and a long-term commitment to delivering excellence in everything we do.”

It's also very diverse. The company is a provider of rubber and specialty carbons, activated carbon, inkjet colorants, cesium formate drilling fluids, fumed silica and aerogel. And for a big company, it's pretty agile and adaptable.

Keohane's main goals in 2016 center on increasing profitability, “expanding our level of innovative new products and developing our talent.

“Given slower growth in the global economy, it is imperative that we focus on areas in which we are well-suited to capture margin growth, whether that is through our unique geographic footprint or our strong application focus.”

To help accomplish that, he said, Cabot is investing in new product and process technologies across its segments to strengthen the company's competitiveness.

“I recognize we can gain a significant advantage and generate stronger business results by engaging and retaining the best talent, as well as fostering a culture of teamwork that brings together our commercial and technical strengths,” Keohane said.

The most important part of a company is its employees, he noted, “and I truly believe that we have the industry's brightest and most talented people. Each and every one of our employees contributes to our success, and our collegial atmosphere inspires a strong culture of collaboration across our global network and is what I believe makes us such a strong company.”

He wants to ensure “we continue to focus on developing a culture in which our people are passionate, driven and innovative—applying their collective expertise to collaborate with our customers and make them more successful in their markets.”

A top priority continues to be safety of the firm's work force, customers, the communities in which the company operates and the protection of the environment, he said. Cabot is making progress in its long-standing plan to reduce its energy and greenhouse gas intensity and new sustainability goals with regard to air emissions intensity, waste disposal volumes and total recordable injury rate, he added.

Keohane said the company will continue to make significant investments to support its sustainability agenda—”an agenda that is underpinned by an absolute commitment to the belief that zero incidents across all our facilities is possible.”

He plans on meeting with the company's executive committee and leadership team in the next few months to engage them in shaping the firm's long-term vision and strategy plans.

A number of future growth opportunities are available for Cabot as it moves forward, thanks to the fact the company is a technology leader, according to Keohane, and “technology is a true differentiator for us.”

Cabot will continue to deliver reliable, high quality performance materials to its customers, he said, and product development and innovation are keys to ensuring continued growth.

“We are becoming more structured in our approach to managing innovation, so that we can bring our great product ideas to market faster,” Keohane said. “We have our technology resources aligned with priorities of businesses to take advantage of opportunities with the most potential value.

“Our technology organization is set up to drive a closer connection with customers and improve speed of delivery.”

Opportunities are plentiful for advanced materials to address global trends such as better energy efficiency and overall sustainability, Keohane maintained.

Cabot's specialty carbon and fumed silica products for the plastics and adhesives markets are enabling the company's customers to meet current-day challenges, he said.

He noted, too, that the firm's customers are investing in the development of high performance tires, “whether to improve fuel efficiency or extend the life of the tire and Cabot's materials are at the center of these developments.”

But there are obstacles in its growth path, he admitted.

Cabot took a step back in its financial performance in fiscal 2015 due to a challenging macroeconomic environment and increasing competitive intensity. “In 2016, we continue to face challenges, such as a slowing economic environment in China and Brazil and the impact of low energy prices,” Keohane said.

To help offset that, the company already has taken a number of cost reduction and restructuring actions. The firm's aim is to create about $55 million in cost savings in fiscal 2016 compared to fiscal 2015.

Cabot's work force was reduced by about 300 full and part-time employees last year. In addition, on Jan. 1, the company ceased production at its carbon black facility in Merak, Indonesia, and is consolidating production at its plant in Cilegon, Indonesia.

“We have adapted to the current macroeconomic environment, and I believe that the actions taken will enable us to improve our performance this year,” he said. “We continue to strike a balance between the need for tight cost management while continuing to invest in innovation that will position the company for long-term success.”

In order to succeed, Keohane maintained, Cabot needs to zero in more on differentiating its offerings through a sharper focus on the commercial and application development sides of its operation. “We are investing to build world class commercial capabilities that will help us create value for our customers through new product development, as well as better manage the products and services we currently offer.

“We are becoming more disciplined in reducing complexity and aligning our service offerings with customers' needs.”

He said the company is getting a better understanding of customers' priorities, and “we will continue to invest in new tools and technologies that will better position us to respond to shifting demand trends and meet changing customer expectations.”

Keohane said many attributes make Cabot a great company. In addition to its 130-year heritage, it holds the top spot or number two position in all of its businesses, he said.

“We also have a strong global network of plants and people that bring the best every day to serve our customers, and this pursuit of excellence is built on a foundation of world class safety performance and a commitment to sustainability.”

When he thinks about Cabot, two things come to mind: “firsts” and people, Keohane reflected. “Throughout our long history, we have been a company of tremendous firsts. As the creators of carbon black, we spearheaded the industry we know today.

“After World War II, we opened a carbon black plant in the United Kingdom, making us the first U.S. company to expand operations into Europe during reconstruction. We were also one of the first multinational companies to invest in China in the late 1980s.

“The spirit of being first is still with us today and is reflected in our entrepreneurial culture. Being pioneers and innovators in the industry is one of the greatest strengths, and I am confident that we will continue to build upon our proud and deep-rooted history of innovation and leadership.”