Goodbye To Royalex?

[ness]

But why is it that this is so common? Do you think all those big companies, who often take over smaller ones with "hostile takeovers", are so stupid that they don't know that what the smaller company is producing is not profitable? That they buy the smaller company because they think its products are all great profit makers but then find out they aren't and think, "Oh, crap, we gotta sell this turkey and all its equipment and buildings?" I don't think so. There are tax laws, among other things, that encourage these companies to buy and liquidate smaller companies. They aren't dumb, and they saw profit in buying the company and then either selling off the buildings and equipment, or closing it down and moving some of the equipment elsewhere, with favorable tax consequences.

And no, the cigar-chomping executives don't close down these operations for the fun of it and they do close them down for the profit motive...and they bought them for the same profit motive.

One company bought another, and it wasn't hostile. Most aren't. I didn't take the time to look too deep, but PolyOne was about twice the size of Spartech which had about a billion in annual sales -- so not a small company. Both companies were profitable beforehand. I suspect Royalex was a tiny portion of their combined business and just didn't fit, and/or the product line wasn't profitable. If you think of all the plastic crap in the world, it's easy to see how that could be the case.

As for profit motive -- well, that's what makes the world go 'round. If you're charging money for your paintings, and deducting expenses for your taxes, you're just as bad as those big shots at PolyOne

[Wayne SW/MO]

You can speculate and blame it on "big" business making money by buying a company and then selling the equipment, used equipment, and making money, but how does that work exactly? Wouldn't the stockholders in question just sell the equipment themselves if it was worth more than the business? 9 times out of 10 a business that is bought out is in distress and doesn't have the capital to save itself. After being bought the new owners sometimes can't revive them for what ever reasons. The bottom line is if a company is worth more piecemealed out than it is as a viable business, it stands to reason it's failure isn't the fault of the new owners.

It's easier for me to see a decline in the demand for royalex than to see some sinister free market override.

[awhuber]

http://www.plasticsnews.com/article/20140226/NEWS/140229931/canoe-thermoformers-scramble-for-royalex-replacement#email_pndaily

Business for sale.

Contact PolyOne

[Wayne SW/MO]

I wonder if the kayak boom has affected canoe sales enough to affect the supply side?

[Terrierman]

Royalex boats are now selling at a premium. Up about $400 to $500 since last year's catalogs came out. I have a very well thought of grandson graduating HS and I bought him a royalex We No Nah Prospector 16 today for $1600 with skidplates and a couple of paddles and was glad to do it. That boat will never lose any value and should last most of if not all of his life. Last year I could have got it for around $1200. Hopefully he'll remember that when it's time for me to go to the old folks home and will make everybody pick a nice one.