PolyOne Corp. (IW 50/28) fought back from the Great Recession with a powerful mixture of lean manufacturing, innovation and specialized product offerings.
Since launching a restructuring program in 2009, revenues for the polymer compounds manufacturer have rebounded nearly 40% to $2.9 billion, surpassing pre-recession highs. The company, based outside Cleveland in Avon Lake, Ohio, also has realized a steady increase in earnings since posting a $273 million loss in 2008. Year-over-year net income rose 6.2% in 2011 to $172.6 million.
In July, the company reported second-quarter net income fell 14% to $24.6 million due to various one-time expenses.
PolyOne CEO Stephen Newlin credits the company's "four-pillar" strategy of "specialization, globalization, commercial excellence and operational excellence" as the driving force behind its turnaround.
Operational excellence includes a Lean Six Sigma initiative the company launched in 2009 that focused on efficiency improvements. Lean Six Sigma combines continuous-improvement methodologies of lean, such as kaizen events, with Six Sigma "belt" training and certification.
The company began the initiative by training more than 600 employees in Lean Six Sigma, according to a presentation by Thomas Kedrowski, PolyOne's senior vice president of supply chain and operations.
By 2011, 40% of the company's staff was trained in Lean Six Sigma. The project initially focused on inventory management and working capital improvements, PolyOne reports.
PolyOne realized a 40% working-capital reduction in the program's first year, the company reported. During the same period, the company's on-time delivery rose 14 percentage points to 95%. In 2011, on-time delivery remained strong at 94%, Newlin said in his annual letter to shareholders.
"This high level of performance is not achieved by stocking inventory; rather, it's the result of consistent sales and operations planning, working capital management and efficiency resulting from a collection of LSS activities over the last five years," Newlin said in the annual report.
Another key part of the four-pillar strategy involved transitioning away from cyclical commodity markets and into specialty applications.
As part of this restructuring effort, PolyOne divested its 50% interest in a chlor alkali joint venture business with Olin Corp. (IW 500/366).
Meanwhile, the company strengthened its specialty platform with the December acquisition of ColorMatrix Group Inc., a supplier of liquid colorants, additives and fluoropolymers.
PolyOne also expanded its specialty business in emerging markets such as Russia, the Middle East and Brazil.
The company has strengthened its R&D resources with the opening of an innovation center in Avon Lake in May 2011 and the expansion of an existing center in Shanghai, China, in June.
In July, PolyOne announced a partnership with the University of Dayton in Ohio to develop advanced materials and production parts using 3-D printing technology.
Looking ahead, innovation is expected to drive the company's "next level of success," Newlin said in the annual report. He cited the company's commercial and technological commitments in 2011 as examples.