Elizabeth MacDonald, 03.28.05
Fantastic Kathleen Bader wants to save the world from polluting oil plastics with her healthy corn polymers.
Racked with sleep-robbing back spasms, Kathlen Bader marches across a wintry parking lot toward a plastics factory in Blair, Nebr., hard hat perched atop her red hair, protective eyewear on, her panty-hosed feet slipping and sliding in blue flats caked with snow. "Wait till you see this factory, it's so cool," Bader shouts behind her as she tramps up a metal staircase sheathed in ice.
Bader, 54 years old, cuts quite a figure in the male-dominated plastics industry, much as she did in her 32 years at Dow Chemical, becoming the only woman on Dow's executive management team. By delivering $2.5 billion in operating efficiencies over the course of four years and by turning around Dow's hemorrhaging polystyrene business, Bader built a reputation as a cost-cutter and marketer nonpareil.
But a year ago Bader left a prestigious, cushy Dow posting in Zurich to take on what she calls the biggest fight of her life: getting the world to kick its habit of consuming plastics made from oil and start using corn-based plastic instead.
The fruited plains of Nebraska are where the intervention will begin. The factory in Blair, opened in 2002, is the property of NatureWorks, a joint venture initially backed with a $300 million investment split between Dow, the world's most profitable chemical company, and Cargill, the world's largest private company and largest grain merchant. The factory can produce 300 million pounds of a polymer called polylactic acid, derived from bacteria that feed on corn kernels. Cargill bought out Dow's interest early this year for an undisclosed amount.
Bader, NatureWorks' chief executive, is on a mission to convince companies that using biodegradable corn plastic won't cost them any more than using petrochemicals and will do the environment a huge favor. Some of the world's trash dumps are so big they can be seen from outer space. A swirling reef of bottles, bags and netting already spans hundreds of miles in a windless dead zone of the Pacific Ocean. "Are you going to be a litterer or a leader?" asks Bader.
Victory is a long, long way off. Oil is the bedrock of the world's plastics industry, which uses it to produce 450 billion pounds of plastics annually for everything from houses to computers. NatureWorks currently produces 100 million pounds a year of polylactic acid, or PLA. Bader is going up against entrenched companies such as Eastman Chemical, Wellman and her corporate alma mater, Dow.
Bader has yet to land a big-volume account such as Wal-Mart or Procter & Gamble. "Everyone who hears our story says it makes so much sense," Bader sighs. "The most frustrating thing is corporate caution; that yellow light bulb blinks red faster than you can blink your eyes."
Customers are skeptical that corn plastic, which degrades within weeks into water and carbon dioxide in the humid, 140-degree heat of a compressed landfill, can handle a Houston summer in a 7-Eleven storeroom. Even in benign storage conditions bottles made from oil-based polyethylene terephthalate, or PET, far outlast NatureWorks' bottles, which start to exhibit tiny dimples after eight months.
Nor are the tree huggers won over. Green clothier Patagonia has shunned Bader's corn plastic over fears that the corn in question might be genetically modified.
"Companies just don't like change," says Bader. "Inertia is always stronger than innovation, and environmental issues are not the exciting thing chief executives want to spend time on."
While packagers don't have to replace their equipment to handle corn plastics, they still need persuasion that corn plastic is reliably cheaper than oil plastic. If oil prices remain above $50, Bader can probably persuade them. To make 1,000 (16-ounce) bottles, you need as the main ingredient either 82 pounds of corn kernels (worth $3) or 55 pounds of oil (worth $10.41 if oil is $53 a barrel).
Producers prior to NatureWorks were spending some $200 to make 1 pound of PLA. NatureWorks has gotten production costs below $1, thanks to continual improvements and the ability to operate on the scale of the Blair factory. Bader says she is selling PLA at the same 60 cents to 90 cents a pound that PET sells for. But oil prices could collapse, as they did in the late 1990s. "We were competitive with PET when oil was at 33 bucks a barrel last April," says Bader. "Bottom line, we can and will meet PET pricing."
And Bader says she can do even better. The Blair plant is only 3 years old versus the 30 years its competitors have had to upgrade theirs. "We're operating below capacity, and we've been evolving our bugs to spit out 25% more lactic acid than they were a year ago, so that's going to raise our volume over the next few years, and it will not matter if oil falls in price," she says.
Bader's stronger selling point is environmentalism. According to an analysis by Bruce Dale, a chemical engineering professor at Michigan State University, growing 82 pounds of corn and making it into 1,000 plastic bottles requires 36% less fossil fuel energy and produces 44% less carbon dioxide than making the bottles out of petroleum, even after you factor in the tractor diesel fuel and fertilizer used by the corn farmers (see chart, p. 110) .
Bader insists she won't go unnoticed for long. In the past year she has doubled the number of corporate clients to 120. Versace, taken by corn plastic's ability to mimic wool, cotton or silk, has begun weaving apparel out of NatureWorks' Ingeo fibers. Families are now eating Del Monte fruits and vegetables from corn plastic containers, listening to Sony Walkmans made out of corn, drinking Biota water from corn plastic bottles and soda at McDonald's out of corn cups. Sales were up 60% last year to an estimated $30 million. (Cargill won't release precise sales figures.) Bader targets 200 million pounds by 2008.
NatureWorks is still draining cash from its sponsor, and Bader won't say how much sales the business needs before it's self-funding. But given that Cargill netted $1.3 billion last year and processes more corn than any company on Earth, it's fair to say Cargill has the will and the way to afford NatureWorks.
Bader says her plastic salad tubs last as long as oil-based ones, and she's getting set to launch a new plastic that holds up better under heat than the existing polylactic. "Who wants to drink out of an eight-month-old bottle, anyway?" Bader asks. She counters her overly green critics by noting that modified corn genes are obliterated by the high temperatures involved in making PLA.
Bader has been selling since kindergarten, schooled by Ohio and Michigan nuns whom she calls the unsung heroes molding tomorrow's marketing leaders. The Adrian Dominicans "had me selling everything and anything to raise money for our new Regina High School in Midland, Mich.--raffle tickets, candy, fruit, you name it," she says. After graduating from St. Mary's of Notre Dame in 1972 and spending six months picking grapes in Bordeaux, France, Bader headed back to the States and asked her father about getting a sales job, just like the one he had, at Dow Chemical.
But Bader says he chided her: "'Now Kathleen, you'll be one of just two women out of 1,800 salesmen worldwide, plus you've got a degree in English, when we're only hiring chemical or engineering degrees, plus we have a nepotism policy.'" But after Bader studied Dow's annual report and bugged all her neighbors who worked for Dow for information, she impressed her future bosses with her intimate knowledge of the company. She got the job the day of her interview. "I have been running uphill in high heels ever since," she says.
While working behind the scenes to establish NatureWorks, Bader attended an industry dinner in Spain in 1998. "Seeing that my name tag read 'Dow,' an executive of Elf Atochem, a French plastics company, turned to me and said, 'Who is the idiot at Dow who's going to wreck our business with this new plant?'" she recalls. "I replied, 'I'm the idiot.'" His face went ashen.
By 2003 Bader was managing a $4 billion portfolio of chemical businesses, but after three decades selling things like chlorine and bromine, she had a "What am I doing with my life?" moment over a Christmas dinner. "There was my younger sister, a special investigator for the Indianapolis police department spending her days and nights closing crack houses; my brother, who is a public defender; and my Dad, who raised eight kids on a $40,000 salesman's salary," she says. "I realized that by running NatureWorks, I had a chance to do something that I believe will change the world."
When Andrew Liveris, Dow's chief executive, offered Bader the NatureWorks job, she went for it. Bader soon discovered that the startup's 79 scientists were pursuing projects willy-nilly, things like corn plastic tea bags, body bags and golf tees. She cut the number of R&D projects from 16 to 2, focusing only on packaging and fibers. To get operating costs down, she ordered the factory to make just 3 runs of PLA at full tilt around the clock for a month each, instead of 12 runs per year. "We went into a fast sprint, which cut back on expensive startup and shutdown costs," she says.
Fifty-dollar oil has certainly helped her sales pitch. PET prices are up 40% since 2003, and polystyrene has doubled since 2002, to 88 cents a pound. Switching to corn plastic a year ago saved Plastic Suppliers, a midsize firm in Columbus, Ohio that sells to labelers that supply Nestlé and Pillsbury. It had lost its biggest customer, a client good for 16 million pounds a year, in July 2003. "NatureWorks' prices didn't rise at all," says Chief Executive Theodore Riegert. "We expect to save a half-million dollars a year with the move."
Eleanor Newman, daughter of Paul Newman and Joanne Woodward and an owner of Newman's Own Organics, signed up for corn plastic "because it's much cleaner than petrochemical plastic, it's biodegradable and potentially recyclable." Wild Oats also increased deli sales 12% in 2004 after it put "corn-tainers" in 80 of its stores in the U.S. and Canada.
Meanwhile, Japan, Taiwan and South Korea have passed laws restricting the use of disposable, noncompostable packaging. "We're offering companies a chance to preempt embarrassing demands for responsible packaging," Bader warns. "Brands that wait for legislative fiat will be left behind and exposed."
The Cargill venture has attracted traditional plasticsmakers into the corn game. German giant BASF has a starch-based polymer, and DuPont has brought in Britain's Tate & Lyle to begin production in 2006 of a partially corn-based polymer called Sorona.
Bader smiles through it all. She heard recently that the coffin industry in Holland plans to use corn plastic because it's more Earth-friendly than oil resins. Out came her new slogan: "It's the ultimate package. We biodegrade with you."
Borden Chemical Inc.
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