A. Schulman began losing money in its U.S. operations for the first time in 2005 after nearly 85 years of profitable operation. Two years, later, a special committee was formed to look at "strategic alternatives",  corporate speak quickly translated by Joseph Gingo. "If you ever read anywhere in a newspaper that your company is considering 'strategic alternatives', you're for sale. That's the strategic alternative they're considering."

That same committee would eventually hire on Gingo as A. Schulman's new CEO effective Jan. 1, 2008, and after a series of decisive moves at the compounder and distributor, A. Schulman was removed from the auction block by December of the same year and has been thriving ever since.

Gingo shared his company's turnaround tale, as well as insights into how U.S. companies can be competitive in the global plastics marketplace, with members of the Akron and Cleveland chapters of Society of Plastics Engineers (SPE) over a packed dinner meeting on Jan. 20 at the Martin University Center on the University of Akron campus.

Gingo, who was a veteran of 41-and-a-half years at another Akron company, Goodyear, agreed to take the reins at A. Schulman only if the board gave him full control. They acquiesced and within three months, the company sold one plant and closed another in the U.S., reducing capacity in the region by 40%. Those reductions in the then money-losing U.S. operations were largely focused on the automotive market, which had been hemorrhaging cash.

"The problem with Schulman was they truthfully believed [automotive] was going to come back, and it didn't," Gingo said. "That's why you come to 2005, and they're losing $11 million in the U.S."

The right moves at the right times helped A. Schulman, but serendipity also played a role. "Well, I think you have to be good but you also have to be lucky, and lucky for us was the recession," Gingo said, counter-intuitively. In addition to realigning the company's North American capacity, Gingo moved quickly to build up cash reserves when he first came on, growing them to $200 million by November 2008, a time when the global economy, after the collapse of Lehman Brothers in September 2008, had gone haywire.

"Almost every one of my competitors is now bumping up against their limits with the banks; they're on credit holds; they have to start taking capacity out now," Gingo said. "So I told you, 'It's good to be good and maybe it's better to be lucky.'" With that good luck and cash on its side, A. Schulman made three acquisitions as part of its continuing realignment, buying on the cheap when some of its competitors shored up their own books. The company acquired McCann Color of Akron and ICO Polymers, including its sites in Brazil. In October 2010, the company acquired another Brazilian company, São Paulo-based Mash Compostos Plasticos.

More acquisitions to come
"So, in approximately a year and a half, we bought three companies, and we're still looking because we still have cash," Gingo said. In the European/Middle East region, Gingo said A. Schulman will be targeting acquisitions in Turkey, North Africa, and the Iberian peninsula, looking mostly to maintain its No. 1 market positions in materbatch and engineering plastics within those sectors. In the Americas, Gingo said the company is looking to move into niches within engineering plastics, while expanding masterbatch in the U.S. and Latin America. Already present in Brazil, it's already looking at growing into Argentina and Chile. In the U.S., it reopened a masterbatch line for whites and additives in Akron, with additional output in Texas at Bayshore Industrial gained through its ICO acquisition.

In Asia, as is the case for many plastics companies, A. Schulman's primary strategy is to build a presence. "Asia is the fastest-growing market in the world, and today it's primarily commodity," Gingo said, "but you have to be there. You have no choice because it won't stay commodity forever."

Whatever companies A. Schulman does acquire will be carefully considered. "We don't make an acquisition that doesn't fit our strategic plan," Gingo said. "If it's not in our strategic plan, we're not interested. All our acquisitions have to hit that strategy number, have to hit our core skill."

Thus far, the strategy is working for A. Schulman and getting Wall Street's attention. On January 6, 2010, the company released its fiscal 2010 first-quarter earnings, ending Nov. 30, 2009. Not quite two years after he assumed the leadership of the company, A. Schulman reported that its North American businesses earned $2.9 million, a $5.2 million turnaround from the first-quarter 2009 loss of $2.3 million. In fiscal first quarter 2011 results reported Jan. 5, 2011, sales for all of the Americas were $115.1 million, up from $76.3 in the year-ago period, with gross profits of $16.5 million compared to $10.0 million for the same period last year.

A family legacy
When Gingo decided to come to A. Schulman, more important than an opportunity to be the CEO was the ability to help a company that had long sustained his family. When Gingo's father emigrated to the U.S. from Sicily, he found his first full-time work in 1935 at A. Schulman. Over 40 years, he would rise through the ranks to eventually become the plant manager at the company's largest facility, before retiring in the late 1970s. He passed away at 85, 10 years before he could see his son lead the company that employed him for his entire adult life.

At 66 years old, Gingo has two years remaining on his contract with A. Schulman, and after his presentation, he said he will not be working past age 70. "All top organizations need change on a 5-7 year interval," Gingo said. "The company needs to be able to look at itself differently." —Tony Deligio

(Ed. note: Photos courtesy Tony Dean, SPE Akron section.)