NEW YORK — Now that its proposed joint venture with Allied Signal is off, what’s next for BASF Corp.?
“It’s business as usual. We are committed to nylon,” said L. Wayne Hill, group vice president of BASF’s fiber products division, adding that a next step might be establishing a nylon presence in Southeast Asia.
As reported, BASF and Allied had been talking about merging their respective nylon and carpet fibers businesses. However, last month, after nearly seven months of negotiations, the deal fell apart. “The joint venture was just one strategy we had looked at in an effort to build our nylon business,” said Hill, in a telephone interview from his office at BASF’s Charlotte, N.C., headquarters. An Allied official said it was too early for his firm to discuss the future of its nylon and carpet fibers businesses, and would say only, “We remain optimistic about our future.”
Industry observers have had a field day speculating on what happened. The most popular theory is that BASF and Allied were unable to agree on a management team to run the new entity. But some people believe the two had trouble getting together on a lot of points, such as where the joint venture would be headquartered.
One industry source said BASF and Allied couldn’t even settle on what to call the new company, which would have generated about $1 billion in sales in its first year.
Hill, however, would not discuss the reasons for the schism, except to say, “It’s better to recognize potential problems before entering into something like this, rather than afterwards. Instead of dwelling on what didn’t happen, it would be better to focus on the future of our nylon business.”
No firm plans have been formulated to move into Southeast Asia and no timetable set, but Hill said the company is “seriously interested” in the region.
“The appropriate vehicle for moving into that part of the world has not been determined, however, like whether it will be a joint venture,” added Hill, whose division consists of nylon staple and bulked continuous filament carpet nylon, textile filament nylon and hosiery nylon, bicomponent fibers for nonwovens and some industrial fibers, and textile colors and chemicals.
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“While our commitment to nylon is global, we have to determine where the strong markets for nylon are, and then be there.”
While BASF’s parent company, the German chemicals giant BASF AG, has been selling raw materials to the Far East for several years, said Hill, it has not been “aggressively” pursuing that area for textile filament nylon.
A move to Southeast Asia would be the latest in a series of moves — the failed joint venture not withstanding — BASF has taken to solidify its nylon position and to divest itself from all other fibers.
In July 1992, BASF sold its rayon production facility at Lowland, Tenn., to Lenzing Fibers Corp.
In April 1993, BASF combined the fibers division of BASF Corp. and the fiber raw material division of BASF AG, Ludwigshafen, Germany, renaming it the fiber products division of BASF Corp.
Last August, BASF revamped the management of its nylon business by creating a team concept, with executives getting input from all elements of the operation, from raw materials to marketing. The team is made up of several BASF executives from all parts of the fiber products business, and the aim is to speed up decision-making and improve responsiveness to customers.
After two years of failing to find a buyer for its polyester business, also at Lowland, BASF will close the operation next month.
“We’ve done several things we’ve had to, to focus on our nylon business,” Hill said. “The performance team is going to be vital in moving our nylon business forward. It is market-driven, and allows us to be more efficient in our operations.
“There would have been efficiencies to be gained with the joint venture,” he added, “but the team has a grasp on production, research and development and marketing.”
BASF produces 60 million pounds of textile filament nylon, all of which are type 6 nylon used primarily for apparel and hosiery applications. It also produces 165 million pounds of nylon staple, which is used in carpet production, and 260 million pounds of bulked continuous filament nylon, also used in carpets.
In 1993, the fibers division constituted $967.5 million of BASF Corp.’s $5.2 billion in sales. BASF AG’s 1993 worldwide sales were about $25.9 billion (43.1 billion marks). Of that figure, $5.9 billion (9.8 billion marks) came from fibers and intermediates for fibers, plastics and chemicals.
BASF Corp.’s nylon plants are at Clemson and Anderson, S.C.; Sylvania, Ga.; Enka, N.C.; Freeport, Tex., and Lowland.
BASF AG also has facilities in Antwerp, Belgium; Sea Sands, England, and Ludwigshafen.