The acquisition is expected to give Shaw a steady pipeline of raw material needed to make nylon carpet. Aside from acquiring Honeywell's nylon fiber manufacturing operations in Anderson, Clemson and Columbia, S.C., the multi-faceted transaction calls for Honeywell to supply Shaw with caprolactam and nylon resin, two intermediate chemicals used to make nylon fibers.
Shaw executive vice president Julius Shaw told NFT that the decision to buy assets related to the production of nylon carpet was designed to make the company's manufacturing process less dependent on outside suppliers. "This is another step in the vertical integration that is positioning the company as a cost efficient manufacturer," he said.
He added that Shaw's stake in the Evergreen Nylon Recycling plant in Augusta Ga. will ultimately yield additional raw material for Shaw. The plant, which has been shuttered for two years, is designed to convert discarded nylon 6 into virgin-quality material.
The facility, which is about 250 miles from Shaw's Dalton, Ga., headquarters, was honored as "Recycler of the Year" in December 2000 by the Society of Plastics Engineers. It reportedly was able to annually produce up to 100 million pounds of caprolactam. The plant was credited with keeping as much as 200 million pounds of nylon 6 waste out of landfills each year, including 140 million pounds of post-consumer carpet. When it was closed in Aug. 2001, Honeywell and its partner in the venture, DSM Chemicals North America, cited market conditions and vowed that it would eventually reopen.
"The recycling plant may not be operational today but we hope that we will be able to re-start it in the relatively near future," said Shaw.
According to Honeywell, the assets included represent most but not all of Honeywell's $1.2 billion nylon business. The company will retain its operations in Shanghai, China, and Arnprior, Canada, and its textile operations in Anderson, S.C., are not part of the transaction. After the divestiture and with the supply agreement, the remaining business is expected to post annual revenues of approximately $900 million.
Earlier this year, Honeywell, which is based in Morristown, N.J., sold its U.S. industrial wax operations to IGI International, Inc. and its Asian and European industrial wax operations to Paramelt BV. Last year, Honeywell divested its Performance Fibers business. The divestitures are part of Honeywell Specialty Materials' plan to focus investment on select core businesses built on growth platform technologies including fluorines, advanced fibers and composites, and electronic materials.