Several tough years in the polycarbonate business are taking a toll on the two companies that invented the transparent engineering plastic that has been plagued by weak pricing, overcapacity, health concerns with BPA, and failure to achieve success as an automotive glazing material.
Last month, Bayer spun off its once cornerstone PC business (with slow-growth polyurethane) into an independent company called Covestro. Yesterday, SABIC made the stunning announcement that it will dissolve its engineering plastics business unit—once the pride of GE and Bob Welch—and move out of its longtime home in Pittsfield, Massachusetts.
SABIC is cutting its losses and taking prudent business steps to consolidate SABIC Innovative Plastics with existing business assets in the Houston, Texas area. Some 300 employees in Pittsfield are affected.
SABIC, which entered the plastics business in the late 1980s, bought GE Plastics in 2007 for $11.6 billion. GE Plastics had been in Pittsfield for more than 73 years.
The official SABIC press release said the future of the company’s Polymer Processing Development Center is being evaluated. The center was once the jewell of North American engineering plastics research. Significant work was done there to develop PC as optical media, an application that got lost in the cloud.
It was also a showcase of the oversized hubris of GE Plastics.
One-time marketing chief Uwe Wascher bought a custom, giant KraussMaffei press that could perform multiple functions. Wascher’s attitude was: “We will build and they will come.” No one ever came. One part of the machine made roof shingles for a while as part of GE’s bid to boost the role of engineering plastics in housing. Another white elephant was Wascher’s plastics demonstration house in Pittsfield. More recently, engineers at the center did good work in expanding the role of Ultem foam in aircraft applications.
I could go on, but suffice it to say that GE’s dream that its plastics business would hugely boom never developed. When the company bought Borg-Warner’s ABS business, it was the beginning of the end.
SABIC’s decision to shut down Pittsfield is the end of the dreams and aspirations of GE Plastics. SABIC will build a solid new business in Texas that is likely to leverage its core strength, which is mass production of commodity plastics. It will be in a prime position to take advantage of America’s shale gas boom.
The engineering plastics will be positioned in a new specialties unit. Specialty engineering plastics like Noryl PPO and Ultem PEI can require a lot of developmental work. Ultem, in particular, is experiencing strong growth. The LNP compounding business has had a strong track record as part of SABIC.
It would make sense to create a new research center with a focus on additive manufacturing. It will be interesting to see how things shake out.