IPC 2012: Schlanger Receives Petrochemical Heritage Award in Chemical Week Magazine

Schlanger: Globalization, technology, and the more rapid pace of decision making have transformed industry.

April 17, 2012 - San Antonio, TX

By Robert Westervelt

The Chemical Heritage Foundation and the Founders Club named Marvin Schlanger, chairman of the supervisory board of LyondellBasell Industries, as recipient of the 2012 Petrochemical Heritage Award at the American Fuel and Petrochemical Manufacturers (AFPM; Washington) International Petrochemical Conference held in San Antonio, TX this week.

Globalization, technology advances, and the more rapid pace of decision making have transformed industry and how it is managed, Schlanger told IPC attendees.

No decision can be made without assessing the global implications, Schlanger says. Application of technology has also become central to success. “Whether it is bulk petrochemicals or specialties we seek a technological advantage over competitors,” Schlanger says. “We use it to create differentiated products for our customers in specialties, or to give us a cost advantage in basic chemicals.”

The more rapid and global availability of information “forces us to respond immediately or lose opportunities to those who are more nimble,” Schlanger says.

Industry also faces increasing scrutiny. “Frankly, this has made us better,” Schlanger says. Environmental, health and safety “benchmarks from 15 years ago would be considered mediocre today. We think about our impact on society in more comprehensive manner. And that is how it should be,” he says. “Every management group understands that industry’s ‘license to operate’ is under attack every day, and fortunately industry has responded.”

Pressure to perform well financially has also intensified. “Investors in our equity or debt and industry’s private or corporate owners have become ever-more demanding,” Schlanger says. “Capital markets are ruthless and unforgiving and this has made us change how we operate our businesses.”

Capital expenditures receive more scrutiny forcing companies to be more analytical in assessing their competitive position, he says. “We can no longer afford to make what we call ‘strategic investments.’ A smart executive once told me that when I heard the words ‘strategic investment’ I should substitute ‘uneconomic.’ We see industry management taking steps that would not have been thinkable a decade ago. Every day plants of businesses are being shut or sold if they don’t meet financial expectations,” Schlanger says.

One pressing challenge is being transformed into a significant opportunity for industry thanks to surging supplies of natural gas from shale resources in the U.S. Schlanger notes that a continuous and urgent concern for him since he started in industry in 1973 has been whether feedstock cost or availability “would affect my ability to provide my customers with the product they need.”

A national energy policy has the potential to significantly strengthen the U.S. economy and competitive position of U.S. chemical makers, Schlanger says. “We don’t need massive new investments or exotic technology,” Schlanger says. “We need leadership with a dose of political willpower.”

Alternative energy sources need to be developed but energy policy must acknowledge that crude and other “petroleum-based sources will be a critical part of the energy supply balance for as long as any of us can foresee,” Schlanger says.

Second, support for alternative fuels to diversify energy sources will bring long-term benefits, he adds. “I know there are some [in industry] who will disagree, but the U.S. has a long history of using tax and fiscal policy to foster key national investments and national strategies for everything from home ownership to interstate highways.” The U.S. should also continue to invest in R&D to develop new energy technology. “Many of the advances in information technology and life sciences had their origins in government funding,” Schlanger says.

Schlanger says his comments are only a thin outline of possible policy. “The real issue is starting a dialogue. I am optimistic this will finally happen.” There is broad support for development of a U.S. energy policy, he adds. “Our need for domestic economic growth may have reached a tipping point that will result in progress.”

Natural gas from shale is the most significant development in the last half century, he adds. “I believe shale will not only help us address energy security but will also have associated economic and political benefits. Low-cost energy is competitive advantage for U.S. chemical manufacturers. Low-cost energy will fuel a renaissance of American manufacturing. Benefits will be felt beyond petrochemicals as American products will be exported across the world.”

Schlanger closed by saying he is a bit jealous of current industry managers. “Every generation has its challenges and opportunities, but today’s opportunities are unsurpassed. . . . The future of our industry has never been brighter.”

Schlanger began his career with Mobil, and joined Arco Chemical in 1975. He served as president and CEO of Arco Chemical in1998 until its acquisition by Lyondell Chemical. Schlanger then worked with private equity firm Apollo Management to lead the acquisitions and management of the Resolution companies in 2000-2005. These companies were merged with Borden Chemical and Bakelite to form Hexion in May 2005, and are now part of Momentive Specialty Chemicals. Schlanger also serves on the board of Momentive Specialty Chemicals.

Link to Chemical Week Magazine

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