PolyOne Strengthens Commitment to Colorants Customers with Selection of Centers of Excellence
August 3, 2001
CLEVELAND, Aug. 3 /PRNewswire/ -- The world's largest polymer services
provider, PolyOne Corporation (NYSE: POL), announced today that it will
establish eight Centers of Manufacturing Excellence (CMEs) to expand
production capacity, enhance rapid response capabilities, and ensure reliable
service and delivery to its colorants and additive customers.
PolyOne plans to invest $18 million to create the CMEs at eight of its
twelve existing colorants manufacturing plants, where the Company will install
new equipment and production lines. CMEs will be technology driven and
customer focused, and will expand PolyOne's overall colorants production
capacity by about 15 percent.
PolyOne's colorants business mixes color concentrates and additives for a
variety of polymers to satisfy stringent customer requirements for coloration
and special color effects.
The colorants CME designations represent PolyOne's latest move to deliver
on its pledge to modernize the North American operations of its largest
business unit, Plastic Compounds and Colors (PCC).
Chairman and Chief Executive Officer Thomas A. Waltermire said today's
announcement "makes it clear that we are moving aggressively to invest in our
colorants manufacturing assets to achieve the three customer-focused goals we
set for ourselves: superior-quality products, unparalleled customer service
and state-of-the-art manufacturing capabilities.
"PolyOne has the leading position in the North American colorants market,"
Waltermire said. "With this investment, we are ensuring that our customers
will fully benefit from the reliable service and delivery performance of the
leading supplier in their industry. We want our colorants customers to feel
great about doing business with PolyOne, with every order, everyday."
Customer Needs Drives CME Strategy
With more colorants manufacturing centers in North America than any other
company has, PolyOne will be equipped to meet all current product needs of its
customers. The CME network will have surplus production capacity to allow for
growth and rapid response on special orders.
Moreover, PolyOne has developed a strategic focus for each of its
colorants CMEs that is unique in the industry, with individual sites focusing
on specific products, markets served, and geographic response. This approach
will drive technology and equipment investments.
The locations and respective areas of focus of the colorants CMEs are:
Elk Grove Village, Illinois - polyolefin colorants for the packaging
market in both small and medium order sizes, and PET colorants
Fort Worth, Texas - the custom profile and sheet market, and acrylic,
vinyl and polyolefin products
Glendale, Arizona - a strong regional focus, producing colorants for
multiple products and markets on the West Coast, in both small and
medium order sizes
Lehigh Valley, Pennsylvania - the wire and cable and general industrial
markets, with emphasis on polyolefins, vinyl, and acrylic products
Norwalk, Ohio - the automotive market, and a special focus on non-
automotive molding customers
Seabrook, Texas - the film, pipe and fittings markets, emphasizing large
order styrenics and polyolefins; additive concentrates
St. Peters, Missouri - styrenic colorants for multiple markets
Vonore, Tennessee - colorants for polyolefin products in large order
The investment in CMEs, along with a concurrent investment of $25 million
in 2001 to unify and upgrade PolyOne's global information technology system,
will substantially improve the Company's ability to meet rigorous customer
requirements for on-time delivery and reliable, rapid response when needed.
"Our drive to reconfigure and invest in our colorants capabilities
reflects our confidence in the potential of this business," said Waltermire.
"That confidence extends to the future of our entire industry, despite the
current market weakness. We are demonstrating our faith by investing for
growth as we strengthen PolyOne's position as the world leader in providing
polymer solutions to customers."
Customer Service Drives Site Selection
In selecting colorants CME sites and determining the optimal number of
CMEs and their varying roles, PolyOne weighed several factors:
Products: Colorants customers are best served by CMEs focused on their
special polymer needs, with individual lines dedicated to specific
Markets: The volume of business and special requirements of markets such
as automotive, wire and cable, and packaging justified the creation of
dedicated CMEs for enhanced quality and efficiency.
Location: Rapid response is at times vital to colorants customers, so
geography was also a significant factor. PolyOne CMEs will maintain the
capability for regional service.
Scale: To benefit customers, each CME had to be large enough to gain
quality and efficiencies in on-site availability of raw materials,
technical expertise, rapid response capability, and cost structure.
Plant Closings Will Follow Customer Transitions
After expansion of the CMEs, PolyOne will work on a customer-by-customer
basis to ensure a smooth transition to these centers, and will move forward
only after the necessary customer approvals have been obtained. Once all
production is transferred, PolyOne will close its four remaining colorants
plants in Broadview Heights, Ohio; Florence, Kentucky; Gastonia, North
Carolina; and Somerset, New Jersey. The plant closings are projected to occur
in the second half of 2002.
These closings will yield an estimated pre-tax earnings improvement of
$16 million annually, beginning in 2003. Approximately 180 positions will be
eliminated, with about 30 new positions being created at the expanded CMEs.
The plant closings will be included as part of the acquisition purchase
accounting related to the formation of PolyOne. The purchase accounting
accrual for cash employee separation and plant phase-out costs totals
In the next 18 months, PolyOne expects to invest approximately $45 million
to consolidate and upgrade its North American PCC operations, which comprise
engineered materials, colorants and vinyl compounds. By the end of 2002, when
the entire newly established CME network will be operating, PolyOne will
achieve estimated annual pre-tax savings of $35 million to $50 million through
investment in the CMEs and the simultaneous closing of sites. On June 21, the
Company announced the locations of its first four CMEs, which will serve
engineered materials customers.
Vinyl Compound Announcement is Next
In the fourth quarter of 2001, PolyOne expects to announce the
reconfiguration and upgrade of its vinyl compound business, the final piece of
the North American PCC reconfiguration and upgrade.
PolyOne Corporation, with annual revenues approaching $3 billion, is an
international polymer services company with operations in thermoplastic
compounds, specialty vinyl resins, specialty polymer formulations, engineered
films, color and additive systems, elastomer compounding, and thermoplastic
resin distribution. Headquartered in Cleveland, PolyOne has more than 9,000
employees at 80 manufacturing sites in North America, Europe, Asia and
Australia, and joint ventures in North America, South America, Europe, Asia
and Australia. Information on the Company's products and services can be
found at www.polyone.com .
Private Securities Litigation Reform Act of 1995
This release contains statements concerning trends and other forward-
looking information affecting or relating to PolyOne Corporation and its
industries that are intended to qualify for the protections afforded "forward-
looking statements" under the Private Securities Litigation Reform Act of
1995. Actual results could differ materially from such statements for a
variety of factors including, but not limited to: (1) the risk that the former
Geon and M.A. Hanna businesses will not be integrated successfully; (2) an
inability to achieve or delays in achieving savings related to the
consolidation and restructuring programs; (3) unanticipated delays in
achieving or inability to achieve cost reduction and employee productivity
goals; (4) costs related to the consolidation of Geon and M.A. Hanna; (5) the
effect on foreign operations of currency fluctuations, tariffs,
nationalization, exchange controls, limitations on foreign investment in local
businesses, and other political, economic and regulatory risks; (6)
unanticipated changes in world, regional or U.S. PVC or other plastics
consumption growth rates affecting the Company's markets; (7) unanticipated
changes in global industry capacity or in the rate at which anticipated
changes in industry capacity come online in the PVC, VCM, chlor-alkali or
other industries in which the Company participates; (8) fluctuations in raw
material prices and supply, and in particular fluctuations outside the normal
range of industry cycles; (9) unanticipated production outages or material
costs associated with scheduled or unscheduled maintenance programs; (10)
unanticipated costs or difficulties and delays related to the operation of the
joint venture entities; (11) lack of day-to-day operating control, including
procurement of raw material feedstocks, of the OxyVinyls partnership; (12)
lack of direct control over the reliability of delivery and quality of the
primary raw materials utilized in the Company's products; (13) partial control
over investment decisions and dividend distribution policy of the OxyVinyls
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SOURCE PolyOne Corporation
CONTACT: Investors & General Media, Dennis A. Cocco, Chief Investor &
Communications Officer, +1-216-589-4018, or firstname.lastname@example.org, or Trade
Media, Christopher M. Farage, Director, Corporate Communications,
+1-216-589-4085, or email@example.com, both of PolyOne