Chemical & Engineering News Digital Edition - Institute of Materia ...

Within a few weeks of the closing, Gaither
and his associates paid off $30 million of
the debt with cash on hand and a bank line
of credit. In 2006, they paid off the balance
due Dainippon after floating a $200 million
bond issue set to mature in 2024 and paying
investors 9% interest.
According to Gaither, the process of rehabilitating
Reichhold actually started with
his return in 2004, when
he and his team began improving
the productivity of
the company’s operations.
Dainippon had already
spent a lot of money on the
firm’s plants. “They certainly
were not neglected,”
he says. But many of the
improvements “were made
in an ivory tower.” The
improvements were well
thought out but just needed
some practical refinement.
The new owners talked
with plant workers and
brought back some of the
Gaither
older engineers who had left the company.
With a bit of “tweaking and debottlenecking,”
the firm reduced production costs by
25%. “That stopped the bleeding,” Gaither
says. A headcount reduction of 15% also
lowered costs and completed the return to
profitability.
WITH COSTS under control and money
coming in, Reichhold began to expand. In
India, in the Pune district of Maharashtra
state, the firm is building a 10,000-metricton-per-year
unsaturated polyester resin
plant scheduled to open later this year.
The 10-acre site has room for expansion,
Gaither says. China will be next, he adds,
noting his company has plans for a similarsized
project there.
In Eastern Europe, Reichhold’s Czech
Republic production partner, Spolchemie,
recently completed a 30,000-metric-ton
unsaturated polyester plant with Reichhold’s
help and is already planning a 20%
increase in capacity. Reichhold takes the
plant’s entire output, Gaither says. In Turkey,
the firm recently started an unsaturated
polyester joint venture that is already
profitable, he says.
Three years ago in Brazil, Reichhold
acquired unsaturated polyester producer
Indústria Brasileira de Resinas, located
in Bahia state. The facility supplemented
production at a Reichhold facility in São
Paulo state and boosted the firm’s com-
posite resins capacity in the country by 20%.
The revived Reichhold is no doubt drawing
the attention of its rivals. John Roberts,
a financial analyst at Buckingham Research
Group, suggests that Ashland, also a maker
of unsaturated polyester resins, might
want to buy it. Because Ashland sold its
petroleum interests to partner Marathon
in 2005 for $3 billion, it has a lot of cash to
invest, and Roberts suggests
that Reichhold could be an
acquisition target. Others
that might be interested
include competitors such
as Hexion Specialty Chemicals,
DSM, Cytec Industries,
and New Zealand-based
Nuplex.
But Gaither says he and
his partners are not interested
in selling out. “We
didn’t buy this company
for a quick flip,” he says.
Besides, “we’re having too
much fun to sell now, and
we believe we can create a
more valuable company over time.”
One way the firm expects to boost its
value is by invigorating its R&D apparatus.
The firm operates major R&D centers in
Research Triangle Park; São Paulo state;
and Sandefjord, Norway. “One of my biggest
disappointments when I returned to
Reichhold was that we were developing
new products, but they were not innovative
products,” Gaither says.
That changed most significantly about
six months ago with the introduction
of a family of waterborne alkyd-based
coating resins. Solvent-borne alkyds are
widely used in industrial and architectural
coatings, but they emit volatile organic
compounds—precursors of atmospheric
smog—as they dry. Reichhold says its novel
latex alkyd offers product and environmental
performance as good as or better than
solvent-based counterparts. “I think it has
a chance to rejuvenate our coatings resins
business,” Gaither says.
Reichhold will continue to grow aggressively
in the developing economies of
Eastern Europe, Asia, and Latin America,
Gaither predicts. Although Reichhold is an
old-line company, it has robust franchises
in coatings and composites resins, he says.
Gaither is confident that with new technologies
and an expanding global manufacturing
operation, the company’s profitability
and continued independent survival are
sure bets. ■
REICHHOLD
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