After SK Capital Partners wrapped up its acquisition of Chemtura's Antioxidant and UV Stabilizer business in May, the newly formed company, Addivant - a name uniquely chosen by the company's employees - was able to hit the ground running.

Lead by CEO Peter Smith, a former member of Chemtura's leadership team and general manager of the business unit since 2009, Addivant has come onto the field bolstered by a 60 years heritage of Uniroyal Chemicals, Great Lakes, GE Specialty Chemicals, Crompton and later Chemtura, and yet enjoys all the trappings of a young and flexible company.

In an interview with Brandi Schuster, Smith outlined his vision for the company and discussed the gap between today's high-performance polymers and additive performance.

CHEManager Europe: You've compared the founding of Addivant to a white piece of paper. How easy is it to embark on a fresh start with 60 years of history behind you?

Peter Smith: It's a very exciting proposition. As a new standalone company, we have been able to define how we want to operate: our culture, values, and strategic direction. At the same time, we have been able to leverage our 60-year heritage and all the benefits it brings with it: highly valued customers and suppliers, and a global, highly trained workforce.

What are your expectations for the company's first year?

Peter Smith: If I had had one wish, it would have been to start the new company in an economic environment where the demand was growing and where customers were looking for new business. The reality is, however, that these are currently challenging economic times, so we have to approach our first year with pragmatism.

Our expectation for the first year is to fulfill our financial goals and to meet all of our customers' expectations. We want to embark on a program of continuous improvement, driving operational efficiency to further improve our competitiveness. At the same time, despite the slowdown in the economy, we have made the strategic decision to further accelerate our R&D investment.

How important is R&D for your company?

Peter Smith: It is a differentiator for us. There has been a lot of exciting innovation going on within the global polymer industry, but up until now the additive industry has been lagging behind. In fact, additives used by most polymer producers haven't changed in 50 years.

About five years ago, we realized there was a gap between our customers' innovation and additive performance and we began to invest heavily in R&D to meet the gap between the polymer industry's needs and the current performance of additives

How big is the gap right now between reality and "could be"?

Peter Smith: It's quite sizable. For example, polyolefin producers today are manufacturing very high-performing materials to meet the requirements of their customers who are operating in demanding applications. The film application is such an example.

Today's films are becoming thinner yet require more durability. To meet these requirements film producers are using combinations of different polymers in multi-layer structures using the latest in co-extrusion technology. This is enabling the creation of films with unique functionalities. This same co-extrusion processing equipment can run at faster and faster speeds, which offers significant manufacturing productivity. However, both of the major improvements are being held back due to the limitations of some of today's additives.

For example?

Peter Smith: There is a tendency for certain types of additives to "bloom," which means they migrate to the surface of the plastic structure. Once that happens, the additives can crystalize and again in some cases form a powder which can agglomerate at the die of the extruder and eventually "fall-off" on to the extruded part.

This severely impacts the productivity of the equipment as it has to be shut down to clean off the buildup of additive residue to prevent any contamination to the plastic material. Addivant has recently developed a family of new additives with better solubility and that don't cause build up on the extrusion die allowing the film producers to use their high-performance extrusion equipment to their full potential and optimizing the return on investment.

What are some other problems with today's run-of-the-mill additives?

Peter Smith: In the recent past polyolefin plants had capacities of around 100,000 tons per annum. Now it's half a million tons per year. This places higher demands on additives. At the same time polymers are being engineered for higher performance often replacing conventional materials such as metal, glass and wood. All of these necessities place a greater demand on the polymer often requiring multiple additive solutions.

An example can be found with the new polyethylene where materials are being produced with a narrow molecular weight; they have stronger properties, higher tear strength, tougher impact, etc. But this same narrow molecular weight makes it more difficult to process the polymer requiring more energy and heat in the extruder, which can lead to oxidization. A high-performance additive can protect the polymer during this process and allow the new, innovative polymers to perform to their full potential in the applications for which they have been developed. I consider additives to be enablers, allowing the polymer to perform not only during the processing, but also in its end application. We work to identify what a polymer is capable of doing and how we can creative additives to bring that promised value.

A logical question here would be about how your company plans on getting up to speed with the competition, but it sounds as if you're confident that Addivant is already ahead of the game.

Peter Smith: Correct, even before the recent formation of Addivant, we had a longer heritage in additives than any other company and we've been able to take advantage of that.

What are the benefits of being a stand-alone company and no longer a part of Chemtura?

Peter Smith: Employees from all parts of Addivant have been encouraged to come forward with new ideas for improvement, which everyone has found to be very empowering. Today employees are challenging the status quo and making decisions faster than before. As a smaller company, we can identify an issue at 9 a.m., discuss it at 10 and make a decision and implement it by 11 a.m. We are empowering people to make decisions, and the real benefit from that is speed. It allows us to develop our products faster, and service our customers better.

You serve many different markets, from automotive to agriculture. In which markets do you see the most potential, both short and long term?

Peter Smith: Within the different markets, it's important to think globally and remain close to the key megatrends. For example, we expect the packaging industry to pick up speed in terms of growth; with the population moving more toward urban areas, food must travel quite a distance while retaining freshness, regardless of season.

And that industry is looking for solutions that meet the latest and highest standards in regulatory requirements. There is a need for new additives that allow food packaging to perform to the highest expectations, but that also conform to all the new regulatory requirements that are cropping up.
This is also the case with the distribution of electricity, which is also becoming an increasingly important market.

When we consider servicing the urban centers of emerging countries with power, we have to take into consideration the fact that those products will have to perform for at least 30-40 years buried under the ground. Any material failure could have dire consequences; this is where we have to be able to ensure not only our customers, but also our customers' customers, that these systems are totally reliable.

Addivant has locations in some of the fastest growing petrochemical regions in the world. What are the advantages for an additives producer to be located in close proximity to the petro industry?

Peter Smith: We are truly a global company; we manufacture in five continents around the world, whereas many of our competitors are single-continent or even single-country based. Specifically, in terms of the petrochemical industry, China now has the largest industrial manufacturing base; as a result, we've seen tremendous growth in polymer production there.

The second market we've watch grow has been the Middle East; we expect that about 20% of the global petrochemical industry will come from there by 2022. The third area is North America, particularly with the shale gas boom. As a result, we expect to see a great deal of growth in the petrochemical industry there in the next decade.

Why is this important to Addivant? We're the only producer of antioxidants in the Middle East. We also have plants in Taiwan and Korea to service the Asia-Pacific region, particularly the Chinese market.

And of course, North America is our historical home, and we have a large manufacturing base there as well. When we are in close proximity to our customers, we can do two things: We can deliver quickly and efficiently and, most importantly, we can customize our products and develop solutions to a company's specific requirements. In essence, our strategy is to leverage our global manufacturing clout to provide custom services to our customers.