S&E perseveres in tough plastics market
A year ago, S&E Specialty Polymers was picking up the pieces from the bankruptcy of Gitto Global Corp. (see "Starting Over," April 4, 2005). After buying the assets of the Lunenburg-based Gitto in December 2004 for $9.3 million, S&E President and CEO Steve Graham hit the road to win back old customers and bring in new ones. In August, S&E bought the assets and intellectual property of another company, the defunct Lynn Plastics, which had done a lot of automotive business.
That was a new line of business for S&E, but the company appears to have made it work. According to Burton Hyman, president of Burton Wire and Cable in Manchester, NH, S&E is now back at the level of service Gitto Global provided two years ago. "And many of the same people are still there," he says. "Not the management, obviously. It’s been a good experience."The specialty plastics business is so close-knit that many industry veterans are known by name throughout New England. So when Gitto Global crashed and burned in September 2004, the region buzzed with talk. Long-time Gitto employees held fast as the company was taken over by Argus Management, which prepared it for sale.
Along came S&E. And within three months, the new owners had doubled the volume of business that had been in place when they took over. Graham says today that sales are up 50 percent over the $20 to $25 million the company had been doing at the outset.
It hasn’t been easy. Prices for raw materials had been rising throughout 2005, even before the Gulf Coast hurricanes that crippled production facilities of ethylene and PVC, affecting raw ingredients and monomers. Multiple price increases totaled 30 to 50 percent on raw materials during the year. Raw material makers put allocations in place, so even companies that had the cash couldn’t necessarily get enough of the raw material they needed. Allocations were measured based on granting plastics firms approximately 80 percent of what they’d bought in 2004. This was particularly tricky for S&E, Graham says, because S&E hadn’t been in business at that time.
"It was just one more crisis to manage," he says. He credits Purchasing Manager Dave Minardi, Operations Manager John Ingargiola, Inventory Manager Robyn Merchant, and Cash Manager Susan Finnery, among others, with pulling the company through. The company has added 10 employees to the approximately 55 people in place when it took over. It has spent an additional $100,000 on equipment.
It’s a reflection of the closeness of the plastics industry that Hyman brings up Trykowski’s name. He’s also familiar with S&E’s vice president of R&D, Ilia Charlat, who had been with Gitto since 1992. Charlat, says Hyman, "is the bridge" between Gitto Global and S&E, just as the new hires are the bridge between Lynn Plastics and S&E. Lynn’s customers, of which Hyman’s firm is one, were "very open to fill the void" left by Lynn’s shutdown, he says.
Some of Lynn Plastics’ products needed approvals from Underwriters Laboratory in order to go to market, an approval process that’s rigorous enough to create barriers to entry to the would-be competition. The approvals are tied to specific compounds and manufacturers. Lynn’s UL approvals came into S&E along with the intellectual property, Hyman says.
S&E is strengthening its R&D "as fast as we can," says Graham. Lynn’s specialties in the automotive sector have given S&E a boost, and it’s now selling to tier-one auto suppliers. "It’s a niche business and we were very pleased to gain entry."
Christina P. O’Neill can be reached at coneill@wbjournal.com
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