“Growth is our number one mandate,” Eastman President and CEO Jim Rogers told regional leaders gathered Wednesday morning at the MeadowView Conference Resort and Convention Center.
“The pressure is on. Expectations are high. But that’s OK — we have fairly high expectations for ourselves as well. We above all expect to grow,” he said.
Rogers said dealing with the recession was the company’s top priority of 2009. The company laid off 300 employees last spring, including 200 in Kingsport, and cut employee pay by 5 percent (that pay cut has since been reinstated).
Eastman also discontinued its industrial gasification project in Beaumont, Texas, and slowed the pace of “Project Reinvest” — a plan to upgrade the Kingsport manufacturing site.
“You all know the tough actions we had to take. We are deeply appreciative of everyone’s sacrifice,” Rogers said.
He said the cuts along with strategic moves taken in the past several years enabled Eastman to grow its earnings — even during the recession. Excluding one-time charges, the company posted operating income of $517 million for 2009.
And Wall Street has taken notice. In the past 10 months, Eastman has gone from not having any “buy” recommendations to having five “buy” recommendations, “which is probably the most in our history,” Rogers said.
He said Eastman was able to take several steps toward growth in the past year despite the downturn. The company completed its Tritan copolyester plant in Kingsport, completed a joint venture to expand acetate tow production in Korea, and completed its acquisition in China to produce the company’s “Ensure” products.
Still, the company is operating under a lot of uncertainty, Rogers said.
“While orders are up, things are hardly back to business as usual,” he said.
“The good news is that we are financially strong and have the cash to fund our growth. Even better news is that we have solid core businesses that I believe can deliver significant growth by taking advantage of mega-trends like sustainability and emerging markets.”
Rogers said he’s focused on growing the company in those emerging markets such as China, Latin America and the Middle East. Eastman is already growing at 17 percent a year in Asia, and the company is experiencing similar growth in Brazil and Eastern Europe.
Rogers said he hopes to expand that growth through joint ventures and acquisitions.
“At the same time we will continue to make investments here,” he said.
Rogers said that although Project Reinvest in Kingsport has been slowed, the company still spent an average of $265 million a year from 2007 to 2009 and plans to invest another $169 million this year. The company initially planned to spend $1.3 billion in five years.
“We are moving forward, but understandably at a little slower pace than we originally thought,” Rogers said.
Meanwhile, employees should get a boost in their pay this year. Rogers said after the breakfast that Eastman employees have not seen a pay raise since April 2008.
“Two years is a long time to ask someone to go without a raise,” Rogers said. “The environment is such that if you have a raise, it’s not going to be large, but to go more than two years without a raise is an awful long time. So we’re going to see what we can do in that regard.”
And hiring will be slow going. Rogers said Eastman has been “letting attrition run ahead of hiring.”
“Someday when we really have growth under way, that won’t be an issue anymore — we’ll need the people. But right now, it’s easier not to hire than to fire,” Rogers said.
Rogers said he’s optimistic for the company’s future — both in the near term and long run.
“I think we are set up to grow. We really don’t have any excuses. We’ve got the money. We’ve got the people. We’ve got the desire,” Rogers said. “We want to be prudent. We want to be smart about it. But we want to make it happen.”
Eastman employs 6,800 people in Kingsport.