These initiatives include:
- Reorganization: A strategic realigning of the company into three business groups;
- Emerging Markets: Increased allocation of resources to emerging markets, such as Asia and Central and Eastern Europe, commensurate with opportunities for profitable growth;
- Innovation: A sharper focus on aligning innovation efforts with the specific, often local, needs of customers around the world. This includes a further unleashing of coatings and electronic-materials technologies, as well as those that can help address emerging materials needs for energy, clean water, food and health care;
- Talent: A fresh sense of urgency to retain, deploy and recruit the best talent across the globe; rejuvenated efforts to nurture people who can adapt products and services to local market needs, and enhanced accountability at all levels;
- Portfolio: Stronger, more proactive portfolio management, along with a relentless focus on operational excellence and continual improvement.
"Now is the right time to launch these initiatives. We have the depth of talent and financial strength to implement an organizational structure that facilitates future growth," said Raj L. Gupta, chairman, president and CEO of the $8 billion specialty materials company. "During the past seven years, we have transformed Rohm and Haas through portfolio changes, and have increased profitability with both process and information technology improvements. And, since 2003, we have rewarded our shareholders with strong revenue growth and a more than doubling of earnings, resulting in total shareholder return of 13.4 percent during that time.
"But while good, this is not good enough," Gupta continued. "We believe we can do better. We see and understand the dynamic changes in the global marketplace, and are taking the steps required to be nimble, responsive -- and financially successful -- in a fast-changing world."
At the highest level, the new organizational structure is the first step towards implementing these initiatives. It consolidates the existing company into three more logical and efficient major business groups -- Electronic Materials, Specialty Materials and Performance Materials. Each group has its own charter, yet all are expected to take advantage of economies of scale that larger organizations provide in terms of supply chain, manufacturing excellence, and so on.
Underlying this structure will be a stronger regional organization -- strategically charged with ensuring that the company can move more quickly to respond to local market needs for technology, new products and services. "Rohm and Haas has been quite successful in competing head-to-head with multinational firms," said Gupta. "However, we believe the competition in the future will emanate from smaller, regionally based firms. We are structuring ourselves to ensure we have the flexibility -- and ability -- to compete locally for talent, and for a larger share of customers, especially in emerging markets. Our local business organizations will have increased independence and accountability for getting closer to customer needs and driving profitable growth."
The new organizational structure, i.e., the three major business groups outlined above, will be effective January 1, 2007.
The Specialty Materials group ($5.7 billion in 2005 sales) comprises:
- Primary Materials ($2 billion in 2005 sales) -- includes the company's existing Monomers business and the polyacrylic acid segment of Consumer and Industrial Specialties;
- Paint and Coatings Materials ($1.9 billion in 2005 sales) -- includes the architectural and industrial coatings segments of today's Architectural and Functional Coatings business, as well as other coatings-related polymer lines from other parts of the Rohm and Haas portfolio.
- Packaging and Building Materials ($1.8 billion in 2005 sales) -- includes the existing Plastics Additives, Adhesives and Sealants businesses, as well as the graphic arts, paper, leather, textile and non-woven segments of today's Architectural and Functional Coatings business.
The objectives for the Specialty Materials Business Group are to leverage the company's flagship technical and operational strengths in acrylic technology, optimize the supply chain, and invest in innovation. Pierre R. Brondeau will be business group executive for Specialty Materials.
For financial reporting purposes, the Performance Materials Group ($1.1 billion in 2005 sales) will include results for Powder Coatings.
In addition to the three major business groups, the Salt and Powder Coatings ($322 million in 2005 sales) businesses will be managed as standalone businesses under the guidance of Jacques M. Croisetiere, chief financial officer.
Strategy and organization: Company executives will discuss its strategic plan and drivers behind the new organization during a Web cast for investors and analysts on Tuesday, October 10, at 11 a.m. EDT.
Third-quarter financial results: Rohm and Haas will hold a separate Web cast to discuss its third quarter results and drivers behind that performance on Thursday, October 19th. Details for this call are available on the "Investors" portion of the company's website: www.rohmhaas.com.