Wellman, Inc.

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Wellman, Inc.

1040 Broad Street, Suite 302
Shrewsbury, New Jersey 07702
U.S.A.
(908)-542-7302
Fax: (908) 542-9344

Public Company
Incorporated: 1969
Employees: 3,600
Sales: $828.2 million
Stock Exchanges: New York
SICs: 2824 Organic Fibers—Noncellulosic; 2299 Textile Goods Nec; 5093 Scrap & Waste Materials

Founded as a small, family-owned wool company, Wellman, Inc. has grown into a multinational Fortune 500 company involved in recycling and the manufacture and marketing of fibers—Wellman’s core business—and plastic resins. Wellman has attained leadership positions in these areas through a series of acquisitions and joint ventures. By 1992 Wellman was the nation’s largest supplier of anhydrous lanolin, third largest producer of polyester staple and polyester partially-oriented yarn (POY) fibers, and the largest and most advanced recycler of plastics.

Wellman traces its history to the Massachusetts wool combing company Hill & Nichols—later renamed Nichols & Company—established in 1927. In 1954 Nichols & Company organized Wellman Combing Company in Johnsonville, South Carolina, marking the first plant of its kind in that state. Ten years later, seeing an opportunity to move into the burgeoning synthetics market, Wellman began to produce nylon fibers, mainly for use by the carpet industry. This was soon followed by the manufacture of polyester staple fibers, which were usually made into fiberfill to be used in such products as cushions, quilts, pillows, and parkas, as well as nonwoven and industrial applications. The fibers were produced from recycled raw materials converted from fiber and film waste.

Due to the steady growth of the plastics business, it was decided that those operations should be separated from other activities at the Johnsonville facility. Thus the Engineering Resins Division was established in 1968. Using recycled nylon fiber and virgin polymers, the division specifically manufactured nylon engineering resins, which were marketed to industries that included automotive, consumer products, and electrical parts for use in such products as fans, headlight housings, aerosol valves, and lawn and garden equipment.

In order to reflect the changing nature of the firm’s business, the Wellman Combing Company was renamed Wellman Industries, Inc. in 1969, while Nichols & Company became Wellman, Inc. Three years later Wellman International Limited (WIL) was established in Mullagh, Republic of Ireland, as a wholly owned subsidiary in order to produce polyester and nylon staple fibers for European markets. These fibers were manufactured from recycled raw materials, in part supplied by, ironically, other European fiber producers with which WIL was competing. The fibers were then exported, mainly to the United Kingdom and Europe.

During the 1970s Wellman’s growth was relatively slow since its main business was tied to the inconsistent supply of waste materials picked up from major chemical companies. By 1979, however, the company had begun its steady progression toward becoming a major company with the establishment of a PET—polyethylene terephthalate—soft drink bottle recycling operation in Johnsonville. The opening of the facility came at a time when consumers were becoming much more environmentally aware, which in turn led to a steady supply of waste materials that could be recycled by the company. Wellman rightly forecasted that manufacturers would soon advertise the use of recycled materials in packaging their products. By developing the proprietary technology to recycle PET bottles, the company quickly became a frontrunner in the recycling industry, and eventually the nation’s leading recycler. Using empty soda bottles collected from states with bottle deposit laws, collection increased markedly from 1983 to 1990 when 30 states enacted laws either granting tax breaks and loans to postconsumer recycling programs, or had mandated separate collection of recyclable materials.

Sacks Industries, a Clark, New Jersey-based fiber broker and manufacturer of nonwovens, purchased a 50 percent stake in Wellman in 1983. The companies’ operations were subsequently merged, and Tom Duff of Sacks Industries was appointed vice president and chief operating officer. Wellman’s nonwoven business grew out of Sacks’ two plants located in Charlotte, North Carolina, and Commerce California. The Charlotte facility uses polyester fiber to make high-loft bonded battings for the home furnishings industry to use as cushioning and insulating in such products as bedspreads, comforters, and furniture cushions. Production as the Commerce plant utilized green polyester fiber, made from recycled green PET soft drink bottles by the Fibers Division, to make geotextile items. These products were used for soil reinforcement and filtration in various civil engineering applications, including landfill and pond linings, and the stabilization of roads and railroads.

Two years after Wellman and Sacks Industries merged, the two companies were purchased by a group of investors and company mangers in a leveraged buyout. Tom Duff became president and CEO of the newly renamed Wellman, Inc. In June of 1987 the company went public when its stock began trading on the NASDAQ exchange at a price of $10.25 per share. Wellman stock was offered on the New York Stock Exchange the following year at an initial share price of $17.50.

In 1989 Wellman entered into two arrangements that would not only ensure the company of a steady supply of recyclable materials, but a market for the resulting products as well. The first agreement, with Browning-Ferris Industries (BFI), a large waste collector, allowed Wellman to buy all the household plastic the company picked up in curbside programs. The second arrangement was with Constar International Inc., one of the largest PET bottle makers in the nation. Constar buys a great amount of the used PET bottles that Wellman collects, and includes the recycled materials to make new bottles. In the meantime Constar International Inc., one of the largest makers of PET bottles in the United States, agreed to purchase much of Wellman’s recycled plastic for use in the manufacture of their bottles. Constar hoped to avoid complaints from environmentalists by using an estimated 25 percent recycled plastic in the bottles. In addition, through a joint venture arrangement Wellman and Constar together acquired four European bottle manufacturers between 1989 and 1990, with facilities in the Netherlands, France, and United Kingdom. Wellstar, said to be the largest PET plastic bottle maker in Europe, sold the bottles and then bought them back for recycling.

Also in 1989 Wellman acquired Fiber Industries Inc. from Hoechst Celanese Corp. Fiber Industries was a leading manufacturer of premium polyester textile fibers sold under the brand name, Fortrel. The company became part of Wellman’s Fibers Division, doubling Wellman’s asset and revenue base, and positioning the company as a leading producer of polyester fiber. By 1992 activities from the Fiber Industries acquisition represented an estimated 82 percent of the company’s total sales. Wellman also had fiber-producing facilities located in Fayetteville, North Carolina, and Darlington, South Carolina. It was estimated in 1992 that Wellman manufactured 26 percent of the nation’s staple fiber and 13 percent of its partially-oriented yarn (POY) fibers.

In 1990 construction of Wellman’s first international PET bottle recycling plant was completed by WIL in Spijk, Netherlands, in order to manufacture polyester fiber. Later that year Wellman acquired New England CRInc, another move that was meant to facilitate its use of recyclable plastics. New England CRInc was the leader in the design, construction and operation of advanced materials recovery facilities (MRF). The company built the first highly-mechanized U.S. MRF and had exclusive North American rights to a patented German recyclable sortation technology, the Bezner automated materials sortation system. New England CRInc separated and processed commingled recyclables, such as plastic, aluminum and glass containers and paper collected from curbside recycling programs. By 1992 there were 10 full-service MRFs in operation, and the company accounted for about 2 percent of Wellman’s total sales.

In 1992 Wellman made two more acquisitions that furthered the company’s manufacturing and marketing capabilities. A newly completed polyester fiber plant located in Marion was purchased, in addition to Creative Forming, Inc. (CFI), the largest user of recycled PET in the thermoforming market. CFI custom designed, manufactured, and marketed thermoformed plastic packaging products from virgin and recycled PET and other materials. The purchase of CFI enabled Wellman to enter the high-growth PET packaging market, while providing another means of using the company’s virgin and recycled PET materials.

Wellman’s acquisition strategy laid the foundation for a 70 percent expansion in its recycling capacity set for early 1994. In addition, capacity for the Wool Division was expanded by almost 40 percent when the company bought the operations of its largest wool top customer in 1992. However, the next year, rather than following its former pattern of acquisitions, Wellman began a multi-year capital investment program to modernize and expand projects at the domestic fiber manufacturing, PET bottle recycling, and PET resin operations.

The key to Wellman’s success has been that it supplies much of its own materials at low cost through its various virgin and recycling plastics divisions. Another advantage has been its manufacturing facilities that are flexible enough to adapt to product and market changes, necessary because recycling materials are commodities whose prices are subject to market fluctuations. Given Wellman’s past record of creating divisions and subsidiaries that meet the changing needs of manufacturers and consumers, and the nation’s increasing attention to the environment, Wellman can be expected to continue its strong growth pattern.