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The Synthetic Rubber Polymer Business

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The Synthetic Rubber Polymer Business
Table of Contents

1. Identification... 3
1.1 Background… 3
1.2 Problem Statement... 4
2. Analysis & Evaluation… 7
2.1 Analysis… 7
2.2 Evaluation… 11
3. Recommendations… 15
4. Plan of Action… 19
4.1 Agenda of actions… 19
4.2 Time Line… 23
4.2.1 Short Term… 23
4.2.2 Medium Term… 23
4.2.3 Long Term… 24

Exhibit 1 Nova Corporation’s Five Years Financial Review… 25

Exhibit 2 H-NBR Market Forecast… 26

Exhibit 3 Specialty Component of Rubber Business… 27

Exhibit 4 The Major International Producers of NBR in 1988… 28

Exhibit 5 Polysar Organization… 29

Exhibit 6 H-NBR Market Demand… 30

Exhibit 7 1987 Tornac Rubber Investment Project Spending Profile… 31

1. Identification

1.1 Background

In the late 1980s, early 1990s, the synthetic rubber polymer business was set to experience an unprecedented growth worldwide. Although that product had been developed in the 1930s, the demand for higher quality has been ongoing. Low quality and low priced rubber comprised the majority of the market; however the trend was moving towards a higher quality - higher priced product. This specialty niche included products such as Polysar’s Tornac Rubber. Barriers to entry in the business were plenty and were qualified as high (i.e. enormous capital costs associated with building synthetic rubber plants). Furthermore, research and development largely determined the success or failure of new products derived from synthetic rubber. Finding labor with the right skills to develop these products proved to be a difficult and daunting task for management. Polysar Limited, a Canadian company founded in 1943, had become a major participant in the world’s rubber, plastics and petrochemicals business. Acquired by Nova Corporation of Alberta in September 1988, Polysar had both of these bases covered (i.e.

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