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An
Unalloyed Success
After
25 years of nearly unbroken growth,
Alloy Polymers has reached a size
where founder Subhash Pahuja can't
run it all himself. A new COO should
help keep the chemical compounder on
the growth path.
by
Peter Galuszka
Subhash
C. Pahuja was a young, energetic student back in 1968 when he left his home in
bustling New Delhi for the University of New Hampshire on the rocky coast of
New England. Majoring in mechanical engineering, he graduated to work
in plastics plants in a series of gritty American
industrial towns. Those were hard years, he says, because “it wasn’t the best business climate at the
time.”
Today,
as founder, chairman and CEO of Richmond-based Alloy Polymers, Inc., Pahuja stands atop his chosen field:
compounding. That's the process of putting
additives into plastics and chemicals to give them special colors,
textures, strength and other qualities.
Recent
days have been busy for Pahuja, now a U.S. citizen. Celebrating the company's
25th anniversary, he and his
staff returned recently from whirlwind visits to production plants in
Ohio and Texas and then joined the festivities at the Richmond production facility and
corporate headquarters.
“We’ve
made a profit every year but one,” Pahuja says proudly. The one bad year was
1995, when company executives took their eye off the ball. Since then, Alloy
Polymers has gone from strength to strength.
Four years ago, the company purchased a 110-million- pound-a-year
polypropylene facility in Gahanna, Ohio. Earlier this year, the company added a 100 million-pound-a-year compounding facility in
Crockett, Tex., boosting total capacity to about 300 million pounds per year.
The
company's big challenge now is bringing discipline to a much larger
organization. This summer, Pahuja hired Charles M. Chiappone, a veteran business
manager,
from SPX Cooling Technologies in Overland Park, Kan., to step in as his president and chief operating officer. “We hired him,"
says Pahuja, "because we wanted to move
away from an entrepreneurial management approach.”
"My
job is to implement process discipline and drive more efficiency,"
elaborates Chiappone, whose career path took him to the plastics and silicon
divisions of General Electric, where he learned the management methods of the
fabled Jack Welch.
Balancing
the internal management challenges with continued growth and expansion is a big
job, especially considering the competitive nature of the compounding industry.
Chiappone identifies a dozen or more competitors.
From
upstream plants, plastic pellets are sent to processing facilities across the nation. After
being treated in methods to give them a particular color or texture -- Alloy
Polymers' link in the supply chain -- the pellets are melted down and molded
into specific shapes. These can be
anything from tiny rivets to nearly finished products such as children’s toys,
dishware or automobile dashboards.
The
Crockett acquisition from Ampacet Corporation, of Tarrytown, N.Y., gives Alloy
Polymers an edge it didn't have before. Crockett is located only a couple of
hours north of Houston, the capital of the U.S. chemical industry, where many of
the raw materials used in plastics and the production of plasticized
pellets takes place. Its
pellets are used in the production of wire and cable
-- an enormous market thanks to the explosion of goods and services
in consumer electronics and telecommunications.
Product-specific
goals were the reason as well for the 2002 purchase of the Ohio facility, near
Columbus.
Many businesses in Ohio and Michigan supply plastic parts to the
automobile industry. The acquisition gave Alloy entre to those companies.
Richmond,
meanwhile, serves as headquarters and the place where Alloy undertakes the truly
difficult production projects -- typically, consumer goods packaging that must meet very tight specifications. While each Alloy facility has its own research
and development capability, the Richmond operation, with its 135 workers,
tackles specialty food packaging, which Pahuja notes, "is hard to do.”
Alloy
Polymer products wind up in such a wide assortment of products that Pahuja can't
keep track of them all. But examples include the plastic liners inside the bottles of Dasani water sold by Coca-Cola,
and
the plastic trays used in South Beach Diet low calorie food.
Alloy
Polymers commenced its corporate existence as an internal unit of precious metal supplier INCO Ltd. in New
Jersey. Pahuja, who worked there, took over the business in 1982 when INCO put
the company on the auction
block. He
spent eight months seeking capital from as many as 50 banks before scraping up
the funds to buy what is now Alloy Polymers.
The
firm refocused on compounding and engineering plastics and in 1987, it moved to
Richmond. “New Jersey was a difficult business climate and it was
land-locked,” says Pahuja. “In those days our biggest customer was Allied
Signal, which has a big plant in Hopewell." Alloy Polymers relocated to a
location near the Port of Richmond -- close to Honeywell, not to mention a slew of
other chemical firms such as DuPont.
Alloy
Polymers is only one of many specialty suppliers that has grown up around giants
like DuPont and Honeywell, says Gene Winter, senior vice president of the
Greater Richmond Partnership, the economic development organization for the
region. It's also part of a growing community of packaging companies, including billion-dollar giants like MeadWestvaco, Chesapeake Corp.,
Alcoa Packaging and Tredegar
Corporation. "The workforce has a lot of depth for a company like Alloy
Polymers," he says. "There are a lot of people who have experience
working with chemical processes and engineering solutions."
The
relocation to Greater
Richmond “was a Godsend move,” Pahuja says, even though its customer mix has
changed over the past two decades. The firm, which still supplies
local chemical firms such as DuPont, grew and thrived while
adopting its own cultural style. The area’s easy lifestyle, he adds, was a help in
recruiting talent from other areas.
COO
Chiappone, for one, says
he’s moved around a lot in his career and that his family really likes the
Richmond area. "There are big advantages here,” he says, notably the
schools.
“People are the key to success,” Pahuja says. “You have
to create an environment of excellence.”
The company offers services, such as blending
and alloying flame retardant polymers, color concentrates and antistatic and
conductive resins. “We
really are a service company focusing on customers," says Chiappone. "You
have to constantly monitor four things. These include people, the processes we
use, the relationships with our customers and our results. They are all
interconnected.”
A
lot of people have noticed Pahuja's success. Recognitions include the Commonwealth of Virginia Entrepreneur of the Year Award, the U.S. Senate
Productivity and Quality Award for Outstanding Achievement and the 2004 Chemical
Entrepreneur of the Year award by the business consulting firm Frost &
Sullivan.
In 2005, the Indian
American Center for Political Awareness listed the top 100 companies in the U.S.
run by Indian Americans. Alloy Polymers and Pahuja ranked No. 21 with $26.8
million in sales. The previous year, the authoritative trade journal Modern
Plastics profiled Alloy Polymers and noted that its success was in large part
due to
its founder’s concept of customer care.
Wrote the magazine: “Pahuja preaches
the philosophy because he lives it.”
-- November 16, 2006
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