Cytec's Coatings Plan

The key drivers behind Cytec Industries’ $1.8 billion purchase of UCB’s coatings raw materials business earlier this year were growth and new technology, says Ben Van Assche, 59, president of Cytec’s expanded surface specialties unit. But Van Assche adds that "cost cutting is a secondary bonus" that will come from melding Cytec’s coatings raw material business with the former UCB operations in Belgium.

Van Assche, who headed the UCB coatings business and transferred to Cytec on March 1 after regulators cleared the deal, says some jobs will be lost, although he will not disclose how many. "Some overlaps can’t persist," he says. "Consolidation is a fact of life."

But Van Assche says he isn’t going anywhere and plans to remain at the head of the surface specialties business from his office in Belgium. As a civil engineer with a degree in business administration from the Sloan School at Massachusetts Institute of Technology, he says: "I’m still young. I’m committed to this business. I’m interested in the portfolio. These are exciting times. Why shouldn’t I remain for the long term?"

After all, Van Assche was behind the coatings business that UCB built beginning in 1997 when he took over management of what was then the chemical sector at the firm. Since then, he has had more than a little experience with observing and managing consolidation.

In 1999, he watched Solutia purchase the Vianova Resins coatings material business from Hoechst for $640 million. Then in early 2003, UCB bought Solutia’s coatings business—much of which was Vianova—for $500 million, and Van Assche played a role integrating the business into his company.

A larger coatings raw material organization is better equipped to provide technical service to coatings formulators, Van Assche explains. The combined UCB and Cytec organizations will also be better positioned to help customers meet regulations for reducing the use of the solvents.

"These are exciting times. Why shouldn’t I remain for the long term?"

The UCB purchase added $1.2 billion in sales to Cytec’s $380 million coatings unit. Once UCB’s amino resins unit is sold to satisfy regulatory concerns, Cytec will have nearly $1.5 billion in coatings raw material sales. Cytec also gained facilities in numerous Asian countries to complement its sole Asian plant in Japan.

The larger organization means that the unit has a considerable budget for technical service and R&D. UCB traditionally spent about $50 million on coatings R&D.

Much of the combined organization’s budget, which hasn’t been determined yet, will go to develop coatings raw materials in which solvents hardly play a role: radiation-curable resins, heat-cured powder coatings, and waterborne resins.

A new variant—an ultraviolet-light-curable powder coating—has potential for use on wood and plastic, he says. The heat required to melt older powder formulations might scorch or melt such heat-sensitive substrates. But UV-curable powders require just enough heat to make the powder melt and flow. Exposure to UV light instantly cures them.

Also under development are UV-curable polyurethane dispersions that are easier to handle and apply than the oligomers used today. "Radiation-curable oligomers are sticky," Van Assche points out.

These and other technology opportunities are the reasons why melding Cytec and UCB’s coatings operations makes sense, he says. "Our vision and values overlap. We’re quickly getting on the same page."