Cyclical Nature of the Polyethylene Business

Each of these three business segments are considered capital intensive businesses where the cost of equipment is relatively very large compared to the fixed cost of labor to operate each business. Therefore, annual revenue per employee is relatively large. For example, a polyethylene plant with an annual production of 1-2 billion pounds of polyethylene requires a few hrmdred employees so that annual revenue per employee is about 2-4 million US dollars. 

For the polyethylene industry, companies involved in the production of ethylene and polyethylene usually target an average annual return on capital (ROC) of about 15%, which is usually based on the performance of a particular segment of this industry over a 5-10 year time period due to the cyclical nature of these businesses on a year-over-year basis. Over the course of the past 80 years, there have been years in which the profitability 

---