Goodyear's Specialty Chemicals Offspring Makes Good by Kerri Walsh, Chemical Week Eliokem (Villejust, France), the former Goodyear specialty chemicals operation, has not wasted time expanding its core resins and additives product lines.
The company, acquired in January by private-equity firm Littlejohn & Co. (Greenwich, CT), is on a spending spree, but would not disclose its capital expenditure budget. Eliokem "is in a growth mode," and it is spending to meet customer demand, says CEO Jacques Collonge.
Eliokem has access to more money for capital expenditures and R&D now that it is independent from Goodyear, Collonge says. "We were a little chemical company in a sea of tires." The company did not get to invest as much as it wanted to when it was with Goodyear, Collonge says.
"Our new shareholders are giving us the resources to grow and expand the company," says Richard Levy, V.P. and Sales Director.
"Littlejohn is leaving these decisions to Eliokem, and has left the original management in place. Eliokem also is able to move more quickly to meet customer needs now that it is a small, independent company," Collonge says. Its technology did not fit Goodyear's core tire business, "so when we separated, we really didn't miss them," he says.
The Goodyear brand, however, is a "fantastic" name, and Eliokem expected to struggle without it, he adds. But Eliokem has been well-received by its customers, Collonge says. "This is a good cash-generating company," he says.
Littlejohn was looking for a global company to buy and build on, Michael Klein, president of Littlejohn, recently told CW. "We were interested in the business because of its leading market share and its global position," Klein says.
Neither he nor Collonge would disclose how much Littlejohn paid for the company, however. Eliokem has sales of about $160 million/year; it does not disclose profits. The company is split into four divisions: specialty resins, which accounts for about 40% of revenues; latex; elastomeric modifiers; and antioxidants. The company does not detail sales for the latter three businesses.
Eliokem has manufacturing plants at Le Havre, France and Akron, OH. All product lines are produced at Le Havre, while antioxidants and specialty resins are also made at Akron. The plants' combined capacity is 60,000 tons/year. Eliokem competes in antioxidants with Great Lakes Chemical and Degussa, which recently bought Raschig's antioxidants business. Eliokem does not disclose its antioxidants capacity, but says its competitors have much smaller plants.
Eliokem plans to increase its total sales by 10%/year, via new products and expanding market share, Collonge says. The company invests 5% of total sales back into R&D, above the specialty chemical industry average of 3%. About 15% of 2000 sales were from products developed within the previous five years, he says. Key areas for R&D spending include rheology modifiers within its specialty resins business, Levy says. Paint using Eliokem's modifiers does not require a thickener, he says. Rheology modifiers are also used as processing aids in elastomer modifiers.
The bulk of Eliokem's sales are in Europe. The company plans to change this, however, by boosting sales in the U.S. and Asia, Collonge says. The Akron site has room for expansion, allowing Eliokem to add production, including elastomeric modifiers, he says. Eliokem has sales offices and technical service centers in Shanghai and Singapore, but no capacity. Asia accounts for 22% of Eliokem sales, and is growing at double-digit rates, Collonge says. Eliokem is evaluating the possibility of building a plant in China, when demand warrants it, he says. A site and product line have not yet been decided, he adds.