Sabic Innovative Plastics gears up to respond to recovery

With the official start-up of its 140,000-tonnes/yr compounding operation for polypropylene (PP) in Genk, Belgium this March, Sabic Innovative Plastics (Pittsfield, MA) has augmented its slate of solutions for the automotive sector from filled PP grades through to advanced engineering plastics.

In an interview at the recent Chinaplas show, Sabic Innovative Plastics President and CEO Charlie Crew said the intent was to supply compounds on a global basis, with PP sourced through a toll-compounding agreement in NAFTA, and plans to further expand supply options in North America, and possibly establish PP compounding capability in China. “It is possible that we might compound in China, but we need the U.S. economy to recover and to consider raw material availability,” says Crew.

Sabic IP’s Crew: Expanded capabilities to serve auto market.

“China is a real center for several key markets [for our products],” says Crew. “It’s a global manufacturing center for consumer electronics, notebook computers, netbooks, and cellphones, and global MNCs have shifted production and technical development here.” Infrastructure is also a major pillar.

Further, automotive is a major market, with China having surpassed the U.S. as the world’s largest car market. “You’ve a combination of joint ventures, leading local players such as BYD and Chery, and hundreds of other car companies literally being established,” he notes. “Here, we can provide material solutions from front ends, through interiors to body panels. Our experience in Europe translates well to the Chinese market.”

In terms of a global recovery in the auto market, “We see the European auto market flat [this year], while the U.S. will be up, albeit off a terrible 2009.” Crew doesn’t see a recovery to a 16.5 million-unit build in the U.S. Growth is certain, however, for Asia, with China and India driving growth. Crew believes that in the future, automakers will build vehicles suited for regional geographies, and “We will have to offer the right materials.”

Crew also reported that Sabic Innovative Plastics’ Ultem polyetherimide plant in Cartagena, Spain is under commissioning and due to start up in the second quarter or early third quarter of this year. “We are using a new technology so we have to make sure [everything is working right].”

More immediately, Sabic Innovative Plastics faces the challenge of managing through the current surge in demand for its products. “It’s a challenging time in that we face raw material shortages, we need to manage our suppliers, and we need to restart assets, so we are rehiring and retraining operators.”

Crew also sees sustainability of the recovery in the U.S. as an issue. “Are we seeing pipeline fill or real demand?” he wonders.

Thirdly, as Sabic Innovative Plastics’ customers globalize, Crew says, “We need to make sure our resources are in place in terms of technological development and supply in order to capitalize on opportunities.” Crews says the company also needs to make sure it is aligned with customer development and can respond as they upscale and get back into their development cycles.

In terms of lessons learnt from the recession, Crew says that, “When the tide goes out you see rocks in the water.” Deficiencies in the company’s business model did become apparent, and Sabic Innovative Plastics saw a need to simplify its business structure. “When you go through a tough period, you need to know where your deficiencies are, and before the tide comes back in you have to become efficient,” he says. Changes were often customer driven, and Crew says that they have learned to segment better. “There were some things that were not very visible in terms of product-line compatibility and flexibility,” he notes. —Stephen Moore

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