Issue Date: March 7, 2011
J. Brian Ferguson
As a company man for 34 years, this year’s recipient of the Society of Chemical Industry’s Chemical Industry Medal, former Eastman Chemical chief executive officer J. Brian Ferguson, is an anachronism in a world where executives bounce from company to company to further their careers. That’s fine with him. “I feel like I worked for many companies just because the nature of the jobs I had changed so dramatically,” he says.
After earning a bachelor’s degree in chemical engineering from Arizona State University in 1977, Ferguson landed a job as an engineer at Eastman Kodak’s Longview, Texas, petrochemical complex. “I wore my hard hat and drove my pickup truck to work every day,” he reminisces. “That gave me a foundation for what we make and how we make it.”
In the late 1980s, while on assignment at the Kingsport, Tenn., headquarters of Eastman Kodak’s Eastman Chemical subsidiary, Ferguson caught a break that put him on the executive track: A member of the executive team chose him to be an assistant.
The post stamped Ferguson’s ticket to his next assignment. In 1994, he moved to Washington, D.C., to become Kodak’s vice president of industry and federal affairs, a job in which he lobbied the government on trade and energy issues. He continued in that position with Eastman Chemical after that firm spun off from Kodak. Then in 1997, he left his job in Washington for assignments in Asia.
The executive roles in Washington and Asia were transformative experiences for Ferguson. Instead of focusing on Eastman’s internal operations, he started to see the firm “from the outside in.” He also came to appreciate his growing influence in the company. “It occurred to me that large groups of people were paying attention to what I said and were going to take action based on what I said.”
In 2001, then-CEO of Eastman Earnest W. Deavenport Jr. embarked on an ambitious plan to split the company in two. One new firm, to be called Voridian, was to house Eastman’s $2 billion-per-year business making commodity chemicals such as polyethylene, polyethylene terephthalate (PET), and acetate fibers.
A new specialty chemical company would retain the Eastman name. It would have about $3 billion in sales of chemicals such as raw materials for coatings, inks, and adhesives. Ferguson was tapped to lead this firm.
Ferguson likens the split to disentangling the nervous systems of conjoined twins. Eastman was founded on polyester, acetyl, cellulose, and olefin chemistries that have been applied to both the commodity and the specialty sides of the company.
Despite the complexity involved, Eastman managers allocated assets, people, and intellectual property to either Voridian or Eastman, and the split was ready to go. Then the Sept. 11, 2001, terrorist attacks happened, and Eastman put the plan on hold.
Deavenport retired early the next year, and the board appointed Ferguson as his successor. A few months into his tenure, Ferguson canceled the split altogether. “Of course, we had to unscramble the egg,” he says.
Ferguson also had to reverse a large portion of Eastman’s corporate strategy. Acquisitions such as ink raw materials maker Lawter International and coatings resins producer McWhorter Technologies didn’t fit into Eastman as well as the firm planned. Ferguson decided to sell them off. “We weren’t going to be able to deliver the kind of value that we wanted,” he recalls.
Ferguson took major initiatives of his own. One, unveiled in 2006, was to build on Eastman’s decades of experience in making chemicals via coal gasification. Eastman got ready to invest in two $1.6 billion joint ventures to gasify petroleum coke and convert the resulting synthesis gas into fertilizers, methanol, and other chemicals.
At the time, petroleum coke was a cheaper feedstock than natural gas. But it wouldn’t be long before horizontal drilling and hydraulic fracturing made natural gas accessible from shale. The gasification projects didn’t survive the sharp reduction in natural gas prices.
Eastman’s IntegRex PET technology was another big push. The company built a new plant in Columbia, S.C., to run the process, which can make solid-state PET resin in one unit instead of two.
But the technology wasn’t enough to turn around Eastman’s PET business, and the company ended up selling the plant as well as the rest of its PET assets. Eastman was the last public U.S. company in a business that came to be dominated by large PET specialists ready to build massive amounts of new capacity. “The industry structure had continued to evolve in a very aggressive way,” Ferguson says.
Although Eastman didn’t stick with IntegRex, the initiative afforded the company the opportunity to convert some of its PET capacity to more profitable specialty copolyesters, such as its Tritan resin, which is replacing polycarbonate in baby bottles and other applications.
Ferguson handed over Eastman’s reins to James P. Rogers in 2009 and retired as chairman this January. In 2001, the year before Ferguson took over, Eastman lost $175 million on $5.4 billion in sales. In 2008, Ferguson’s last year at the helm, it earned $346 million on $6.7 billion in revenues.
In retirement, Ferguson is turning his attention to pastimes he had put off as he was climbing Eastman’s ranks, including hunting, fishing, golfing, and fast cars. He also manages his family’s charitable foundation.
Businesswise, Ferguson serves on the boards of directors of NextEra Energy and Owens Corning. “That keeps my dance card about as full as I would like to see it,” he says.
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