Spartech Corporation

Immaculate timing┬áJanet Mann tells Gay Sutton how Spartech CorporationÔÇÖs turnaround initiative has helped the company weather the financial downturn and prepared it for strong growth in the future. Being in the right place at the right time is acknowledged to be an essential ingredient for individual personal success. But for a business, the secret is in doing the right thing at the right time. Achieving this requires not only an element of luck but, more importantly, a very healthy helping of shrewd business acumen.┬áPlastics giant Spartech is a company doing just that. ÔÇ£At the beginning of 2008 we brought in a new CEO, Myles Odaniell, and essentially set out in a new direction,ÔÇØ explains Janet Mann, senior vice president of marketing technology and commercial development. To put this in context, from 1993 through 2003 the company had expanded rapidly, growing from just a small company to the billion-dollar organization it is today by making a string of 23 acquisitions, all of them in the plastics processing sector. From 2004 to 2007 the company enjoyed a quieter period, making only two further acquisitions. Then in 2008, with a new CEO at the helm, Spartech set out to integrate this long list of acquisitions and create a single unified company. ÔÇ£At that time, though we were called Spartech, there were all sorts of small businesses and operating units within the company. Now weÔÇÖre in the process of creating one Spartech, with one centralized structure that will support the entire company and deliver purchasing and operating efficiencies,ÔÇØ Mann says.The first part of 2008 was spent creating the business plan for reconfiguring SpartechÔÇÖs operational structure. ÔÇ£We brought in new leadership in some of the functional arenas, realigned the business portfolio, and looked at which businesses were core and which ones werenÔÇÖt. And we created a new set of values that are being communicated through the organization.ÔÇØThe company now has four core business groups: Custom Sheet and Roll stock, which is the largest section of the company and the leading player in its field; Color and Specialty Compounds; Spartech Packaging Technologies, which has recently grown through the acquisition of Creative Forming; and Engineered Products. Each operates as an individual business from a profit-and-loss standpoint. However, to bind them together, the company is building a set of core company-wide management functions.ÔÇ£WeÔÇÖve drawn all the manufacturing together so we can make sure itÔÇÖs operating with the greatest efficiency across the entire organization,ÔÇØ Mann says. ÔÇ£Our safety procedures, for example, are the same across our business divisions, and our quality practices are best in class.ÔÇØThe company has created a single technology and development organization, through which it standardizes commercial practices and processes and shares them across the organization. This single structure is also delivering significant strategic value by enabling management to assess and decide on the viability of new development initiatives in terms of value to the company, and where best to direct resources. Similarly, a central procurement organization manages purchasing for the entire company, and a shared financial services organization is in the process of being created. ÔÇ£From the customer perspective, however, weÔÇÖre keeping the individual identity of our original businesses, because this is where theyÔÇÖre individually unique,ÔÇØ Mann continues. ÔÇ£Without a doubt, we have a very strong relationship with our customers, and when you change a company you want to preserve that rich heritage.ÔÇØAll this has taken considerable investment, both in employing new expertise and in training the existing staff. ÔÇ£While we have established a new leadership team and have people in new roles, we have retained people with key leadership talent and tremendous industry experience and Spartech history. Unlike other companies who come in and decimate, our goal is to add in key functional areas where we need new expertise. But at the same time, we want to have everyone that was originally here aligned to utilize their knowledge and create a better company overall.ÔÇØThis turnaround plan was established and initiated at an opportune timeÔÇöbefore the economy hit the rocks late last year. And the improvements have helped the company through the difficult period. ÔÇ£It has been difficult economically, and if you look at our sales growth and total earnings in 2008, theyÔÇÖre not ones to write home about. But even though the economy degraded, our unit margins improved, which means we should be in an excellent position to really accelerate our growth when the economy turns around.ÔÇØOne of the key factors in SpartechÔÇÖs success has been innovation, and it intends to continue playing an industry-leading role in this area. In recent years it has focused heavily on replacing less environmentally friendly products with more environmentally friendly ones. SpartechÔÇÖs Rejuven8 line, for example, is manufactured from PLA, the worldÔÇÖs first commercially available polymer made from corn. ÔÇ£And weÔÇÖre in the marketplace right now commercializing a project called Extreme TPO, a thermoplastic polymer designed to give better properties than reinforced fiberglass and to be more environmentally friendly.ÔÇØThe company is also working to reduce the amount of resin required in polymer production. As most resins are oil-based, this will effectively reduce the amount of fossil fuel consumed and will also reduce the weight of the product, in turn yielding reduced shipping costs.Recycling is another area in which Spartech is investing heavily. ÔÇ£We believe a strong part of sustainability in plastics is to use thermoplastic-type products that can be recycled and increase our ability to use recycled resins in our streams. On an everyday basis, most of our customers send us their scrap now, to be recycled into products. And weÔÇÖre getting more involved in the use of post-consumer resinsÔÇöthose that come off the consumer recycling stream.ÔÇØMeanwhile, Spartech is doing its part to reduce its carbon footprint. During 2007 the company reduced its waste to landfill by 54 percent and reduced greenhouse gas emissions by over 94,000 metric tons of carbon equivalent.ÔÇ£Looking to the future,ÔÇØ she says, ÔÇ£weÔÇÖre planning to grow the business, particularly from the innovation perspective. So while other companies are downsizing in those areas, weÔÇÖre adding and realigning resources to them. We believe that in a slow economy, this is exactly the time when you should be developing new, more cost-effective sustainable solutions for your customers.ÔÇØ ÔÇô Editorial research by Tim Conlon┬á