A labour deal
A permanent labour pact with the Operating Engineers Local 216 was another priority.
“They cancelled the contract with Lion, and had a temporary contract with us,” Nelson said. For the past year the union and East West Copolymer worked at negotiating a permanent agreement, and recently succeeded in getting a two-year deal.
“That puts us in pretty good stead. The union has done a really good job of working with us,” Nelson said. The facility employs about half of the 310 staff it had when the shutdown occurred.
Next up on the “to-do” list was getting more investors to ensure the company's growth plans succeed. Originally, the investors were “myself, the employees and one other investor, a friend of mine,” the president said. The company was able to attract some other investors, including Main Street Capital Corp., which provided $12 million.
Just after Christmas, East West Copolymer closed a deal with TerraMar Capital LLC, a Los Angeles-based private equity company. “They brought in additional capital to help us grow. The firm is in good shape now for several years to come,” he said.
The investors recognized that East West Copolymer, operating as a viable business, is in a good position as one of only two independent SBR businesses in North America, Nelson said.
Lion Copolymer, after closing and selling the Baton Rouge operation, re-entered the ESBR business in late 2014 when it bought Ashland Inc.'s International Specialty Products' SBR business. Ashland had obtained the operation when it acquired ISP, which itself purchased the onetime Ameripol Synpol unit out of bankruptcy in 2003.
Ashland had been shopping the rubber business for a while, and Nelson admitted East West Copolymer contemplated making a bid for it. “The timing wasn't right,” Nelson said, as his company had its hands full re-establishing itself.
The return of Lion Copolymer as a competitor now has no particular impact on East West Copolymer, Nelson said—same operation, just a different owner.
Among other activities East West Copolymer accomplished since its start-up was securing a $16 million (€14.5 million0 revolving credit facility with NewStar Financial Inc. last September, and signing on T.L. Squire & Co. Inc. to handle sales and marketing of SBR to non-tire rubber product makers in North America.
TL Squire essentially fills a role formerly held by Harwick Standard Distribution, which moved on from the Baton Rouge operation when Lion shut it down. Nelson said the TL Squire arrangement started off a little slow, but “ramped up last year, and we expect a big year from them. They have been great. They have been in the market a long time, have lots of customers and are well-respected,” he said.
While the overall prospects are good, Nelson said East West Copolymer does have to deal with some global issues in the SBR market, specifically the economic slowdown in China.
“The spot market is still a challenge,” he said. “A lot of volume that historically has gone to China is finding its way into North America, and we have to compete with that.”
In contrast, the huge decline in oil prices has resulted in some lower raw material costs, particularly for butadiene, he said.