Mark J. Costa
Chairman and Chief Executive Officer at Eastman Chemical
Sure David. And a great question. We're obviously spending a lot of time focusing on putting this year behind us and focusing how we recover and deliver a lot of earnings and growth next year. When you think about it in the way we built our forecast, or if you will, a scenario was to intentionally be somewhat neutral on where markets recover or don't recover or what oil prices or energy price that can do. So we want to sort of a neutral case to focus first on what are the things that are more in control or math that deliver a better year next year than this year. And the biggest driver of course in the decline in earnings this year was volume and mix. And when you look at the extent of that across the portfolio, we're probably down about $450 million in volume and mix from a variable margin point-of-view, excluding capacity utilization.
And then as we look at how that can recover next year, we sort of think of it in three buckets. The first is, obviously, a lack of destocking. There's a lot of conversation around that. And it was certainly a very significant element to our business. And we generally think destocking was probably about 40% of the decline in volume this year. But let's be conservative and we call that sort of one third, comes back next year from destocking. So $150 million there on variable margin. And that's just a lack of destocking. So it doesn't include restocking. It doesn't include any markets getting better.
The second element is innovation. We're very excited about our innovation portfolio. It's been the center of our growth story as a company. And the biggest element of course will be the Kingsport methanolysis plant coming online, delivering an incremental $75 million in EBITDA to the -- to next year relative to this year. And that's all in with cost and revenue and margins considered. So that's pretty considerable. So you've got that on-top of the lack of destocking.
And then you've got innovation that's happening across our portfolio. It's not just Kingsport methanolysis. We've had great success with premium interlayers, delivering a lot of value with the growth in the auto market -- automotive market, an extreme leverage of 3.5 times the material per car and EVs versus ICE cars. So that's a great business and we'll continue to deliver above-market growth. We've got the event of products we've been telling you about where we've had great success, adoptions and straws and some brands going national as well as now making great progress in our polystyrene replacement for protein packaging and food packaging, etc., and you're going to see some real nice growth out of that business, and textile business has been great this year and will continue after shield [Phonetic], picking up more business in food cans and we're starting to move into the beverage side. So there's a lot of growth happening throughout the portfolio through innovation even in a flat market. And we're going to see more benefit really next year when you're in a more stable market situation. I mean, people are focusing on new launches.
The third element of course is the the markets. And as you saw in our guidance, we're being pretty cautious about where the markets might go. I think there's lots of debate around markets could recover or markets could could go down. I think it's fair to say none of us really know. But I think it's reasonably expect that our stable markets will probably stabilize because the end-market demand there is in a sort of not as discretionary. So pharma, personal care, packaging for food, those kind of markets are all going to stabilize, medical, and probably have some modest growth when you look at those dynamics. Automotive is expected to grow and we think that's a reasonable assumption. Building construction, we think is flat-to-down a little bit. So when you put all that together, you've got some additional volume growth out of that on top of those numbers from destocking and Kingsport methanolysis. So considerable value there.
The second part is asset utilization. So we've been extremely aggressive in managing our assets and pulling the utilization rates down to free up cash. You saw great success and over $500 million of cash generated in the third quarter by the actions we took. Unfortunately, it comes with a accounting headwind. It's not a cash headwind. But you take a $75 million utilization headwind hit in the third quarter alone for that, or $75 million really on a full-year basis when you think about the tailwind for next year. So you get to add that back if volumes are flat and that comes back.
Obviously, there's actions we're taking to keep our cost structure flat. So all that revenue growth we're talking about for both in the volume side of things flows straight to the bottom line. So the incremental margins on the recovery are going to be quite strong. So all that creates a good situation. Offsetting that, could be and especially pricing starting to moderate in a few places. We still have a lot of raw material in inventory that is lower and still needs to flow through. We're about 50% FIFO in our company. So you're going to see some benefits of that flowing through into next year that will sort of offset specialty pricing. So we don't really see raw materials as a tailwind. But we also don't really see it as much of a headwind. So all those factors put together delivers quite a bit of improvement in earnings and earnings from our operating in the cash side as well. So we're pretty excited about focusing on all these actions that we can control in this uncertainty and delivering a success for our owners.
