National Specialty Chemical Distribution Makes For Maximum Benefits

 

By Ed Antonucci, New Business Development Manager, Palmer Holland
Appeared in the October issue of PCI


Chemical distributors have always played an essential role in the coatings industry. Historically, most distributors represented commodities, solvents and packaging at the local or regional level. While that is still important today, of growing importance is the focus on value-added services from the national specialty chemical distributor. As chemical suppliers choose to reduce headcount in the area of sales and technical support, opportunities continue to reveal themselves for full-service national specialty chemical distributors. What value-added services could a sales team based around the country provide, you might ask? Salespeople not only must be knowledgeable about the product technology of various suppliers but also must be able to provide regulatory information needed by the compliance department, as well as pricing and logistics support for purchasing teams at their customers.


Technical Support

The number of companies producing both aqueous and nonaqueous industrial coatings continues to grow, and many are focused on developing and upgrading their formulations to meet market demands. Many of these companies are smaller in scope and have limited product development resources. The distributor’s salesperson has a responsibility to present formulating tools, new product technology and product suggestions that allow customers to meet and exceed their formulating requirements quickly. A full-service specialty chemical distributor provides this by having a complete product portfolio of pigments, resins and additives. While suppliers continue to produce many of these domestically, an increasing number prefer to optimize production on a global basis. This means that an additive or pigment the supplier produced previously in the United States might now come from Europe, South America or Asia. Regardless of origin, it is the supplier’s responsibility to ensure that the quality is consistent, while it is the distributor’s responsibility to provide the logistics of this revised supply chain in order to meet the customer’s service levels. This role of the distributor impacts not only the technical functions in the customer’s organization but also the compliance and purchasing departments.


Coatings formulators continue to demand new approaches in response to regulatory changes or industry trends to meet contemporary formulating guidelines such as faster cure, lower VOC, improved hiding, better resistance properties and lower film thicknesses. Formulators should seek out a distributor with both a comprehensive and synergistic product portfolio. Partnering with a national specialty chemical distributor that can present multiple products, which work together to achieve these complex solutions and reduce development time, is a notable advantage.


Today, the national specialty chemical distributor has to be committed to focusing a large part of its time in front of its customer’s technical team to allow the formulators to maintain and optimize their product portfolio. Technical managers with hands-on formulating experience are a powerful resource. The distributor’s technical manager assists the formulator in addressing complicated formula issues to provide quick and efficient solutions.


Compliance Support

National specialty chemical distributors’ internal compliance departments must maintain up-to-date US GHS SDS and TDS documents on their product offerings and assist in the completion of product forms/procedures that customers require. Providing this service shortens the time it takes to implement a new product into the customer’s compliance system. This is particularly important when sourcing offshore material. The national specialty chemical distributor provides a high level of expertise in ensuring the proper paperwork is in place so the compliance department can confirm that its organization meets all regulatory requirements. This is a critical role in today’s market, as regulatory issues continue to change and noncompliance can prove to be quite expensive.


Supply Chain and Purchasing Support
At their core, distributors of specialty chemicals must be able to provide short lead times, consistent pricing and order consolidation assistance. While additives may only represent a small percentage of the cost of the formulation, those same additives can stop production entirely and delay on-time delivery. Distributors need a commitment to inventory product as determined by forecasts as well as maintaining safety stock to handle any changes in demand. Inventory turns should not be the critical driver as it is with commodities and solvents. Working with a national specialty chemical distributor adds a ‘spring’ in the supply chain that minimizes risk/service failures in light of decreased visibility and forecasting complexities. One example is that national distributors can often ship from another warehouse should a product temporarily be out at their standard warehouse. This is a tremendous advantage, particularly with many lower-volume items, since it can be difficult to forecast usage accurately considering different loading levels depending on batch size and production equipment variability.


The luxury of ordering smaller quantities of products also drives up the value of a distributor by keeping raw material inventory dollars at a minimum while saving the customer’s warehouse space for finished goods. The ability to combine orders of various products into one purchase order has the potential to save on multiple order processing costs and optimize freight costs. Minimizing pricing and invoicing issues also results in cost savings. Working with a distributor’s customer service and sales team allows the procurement department to ensure correct pricing, resulting in minimal payment discrepancies. This improved service contributes to supply simplification, tail-spend consolidation among multi-plant locations and working capital flexibility.


Information Access

In today’s interconnected world, learning a great deal about the myriad of products offered by a supplier or a distributor from a simple web search is effortless. However, understanding product complexities and how each interacts with other raw materials is more difficult. A distributor focused on selling specialty chemicals has a better understanding of these interactions and can mitigate negative results based on its broad base knowledge of its product offering.


The distributor’s role and responsibility is also to introduce new solutions to its customer base. A distributor who is active in not only the coatings market but also in other markets such as plastics, adhesives, metalworking/lubricants, agriculture, or health and nutrition can use this broad spectrum of knowledge to help provide new tools and solutions. Envision how a surfactant that is an excellent wetter for herbicides in the agricultural market may offer similar properties on a problematic substrate in the coatings market, or how hydrocarbon resins can be used as a way to reduce dry time in alkyds based on their performance in pressure sensitive and hot melt adhesives.


Some of the new solutions are the result of a distributor’s marketing department analyzing various trends and gathering marketing intelligence related to industry regulations, supply needs and global sourcing shifts. The marketing department also monitors information from various social media platforms frequented by members of the coatings industry; this information is then often shared with suppliers and customers.


In addition to their technical competence, national specialty chemical distributors can help facilitate technical support from suppliers as needed to assist customers in selecting the right products. The distributor’s product mix is a valuable asset to both its customers and suppliers. By providing a large selection of product offerings, the distributor can ensure that the customer’s formulation can be optimized, tested, reviewed and tested again if needed until the customer reaches the best solution for that application.


Looking to the Future

Much like the coatings market, the distribution market continues to consolidate, but there is a light at the end of the tunnel. The national specialty chemical distributor continues to gain importance as suppliers look to minimize their distribution network and as customers with regional or national manufacturing facilities show an increased preference to purchase from a national distributor.


National specialty chemical distributors will continue to serve as one of the vehicles to identify and understand future needs of the coatings industry. The distributor assists the raw material manufacturer in product development, market promotion and sales success through its strong industry knowledge about the requirements of its customer’s technical, compliance and supply chain departments. Distributors with a robust product mix of pigments, resins and additives coupled with active account management, technical and support teams that can adequately address the needs of their customer base are an integral part of the supply chain today and will be even more so in the future.

For additional information, email Palmer Holland Inc. at marketing@palmerholland.com.

State Of The Trucking Industry Infographic

Transporting goods from point A to point B is just about the most simplistic way to describe the trucking industry, but you know it’s much more complex than that. We’re all feeling the pressures from cost analyses to driver shortages to inventory strategies. Take a look at the infographic to learn a little more about what’s going on in the trucking world. We’d love to talk about any transportation issues you’re facing and how we can work together to make them more manageable. 

 

Download Trucking Industry Fact Sheet.pdf (583.35 kb)

Arkema Press Release Regarding Crosby, TX Plant

Read below for a press release from Arkema, Inc. posted on 8/31/2017:

At approximately 2 a.m. CDT, we were notified by the Harris County Emergency Operations Center (EOC) of two explosions and black smoke coming from the Arkema Inc. plant in Crosby, Texas. Local officials had previously established an evacuation zone in an area 1.5 miles from our plant, based on their assessment of the situation.

We continue to work closely with federal, state and local authorities to manage the situation.

As we communicated in recent days, our site followed its hurricane preparation plan in advance of the recent hurricane and we had redundant contingency plans in place. However, unprecedented flooding overwhelmed our primary power and two sources of emergency backup power. As a result, we lost critical refrigeration of the products on site. Some of our organic peroxides products burn if not stored at low temperature.

We have been working closely with public officials to manage the implications of this situation, and have communicated with the public the potential for product to explode and cause an intense fire. Organic peroxides are extremely flammable and, as agreed with public officials, the best course of action is to let the fire burn itself out.

We want local residents to be aware that product is stored in multiple locations on the site, and a threat of additional explosion remains. Please do not return to the area within the evacuation zone until local emergency response authorities announce it is safe to do so.

Organic peroxides are a family of compounds that are used in a wide range of applications, such as making pharmaceuticals and construction materials.

Diving For Pearls

EVONIK SPREADS NETS FOR ADDITIVES GEMS

By Lisa Tocci
Publised in December 2016 Issue of Lubes'N'Greases

Pry open enough oysters, and you might find a random pearl. To succeed at it on a commercial scale, you need to amass the right insights, tools and talents for the hunt.


The same idea applies when seeking novel lubricant chemistries, feels Ralf Duessel, Ph.D., senior vice president and managing director of Evonik’s Oil Additives business, based in Darmstadt, Germany. Whole strings of additive pearls could be tucked into the recesses of the global chemicals—industry including in parent company Evonik Industries—and it’s his job to strategically deploy the resources and tools to exploit them.


One tool is nearing completion now in Darmstadt: an advanced research laboratory to uncover gems and polish them for the market. The new Friction and Motion Competence Centre, nicknamed FriMO, is expected to be fully operational in first-quarter 2017, Lubes’n’Greases heard during a mid­September visit to the construction site.


Unlike Darmstadt’s existing product performance and customer service labs, FriMo will focus on mid- and long-range developments. Oil Additives also expects it to be a platform for collaborating with other segments of Evonik Industries, a publicly traded specialty chemical company with 2015 revenues of 13.5 billion euros, 18.2 percent profitability and more than 33,500 employees.


“Although Evonik has 22 business lines, they are organized into three operating segments: Nutrition and Care, Performance Materials and Resource Efficiency, which includes Oil Additives,” explained Duessel, a chemical engineer who was recruited out of university by Evonik 20 years ago and named head of Oil Additives in early 2013. “Oil Additives is the largest business within Evonik that is selling into lubes. However, there are a lot of areas in Evonik that can be tapped for lubricant thinking, and that’s why we established the Friction and Motion Competence Centre and are building this dedicated laboratory.”


Other business lines in Evonik’s Resource Efficiency segment include coatings (which has defoamers, resins, binders and surfactants), cross-linkers, high performance polymers, and metal oxides such as silanes and silica. Each may hold concepts and produces that could be useful in lubricants, but interactions with Oil Additives were infrequent until now.


The missing link “was the resources that need to be dedicated to making such ideas come to reality,” said Stephan Fengler, Oil Additives’ vice president of innovation management. A Ph.D. chemical engineer, he took charge of innovation for oil additives, polymers, coatings and adhesives in 2012.


“Today our technology is focused on bulk fluid, but the issue increasingly is friction and wear,” he continued. “Where exactly does wear happen? It’s at the interface of the materials and the lubricant, and FriMo is bringing us to that interface. The next stage will be to look at the whole system of moving parts, materials, surfaces and lubrication,” rather than primarily focusing on viscometric effects.


Based on internal estimates and data from consultancy Kline and Co., Duessel pegs the value of the world’s lubricants market at 90 billion euros. Additive suppliers account for about 13 billion of this, including 2.1 billion euros of viscosity index Improvers and pour point depressants, the two leading areas for Evonik’s Oil Additives business.


“The lube market worldwide is growing maybe 1 percent a year, but we believe there is higher demand growth for additives,” Duessel said. “Each time a GF-specification or ACEA specification for engine oils increases, the demand for additives increases. The industry may sell less oil overall, but more additives are in there.”


Various consultants rank Evonik as the fifth or sixth largest company supplying lubricant additives, right after the top four additive package suppliers. Those four, who Kline reckons share about 75 percent of the global market, include Afton Chemical, Chevron Oronite, Infineum and Lubrizol.


Unlike them, Evonik plays in the area of specialized components, not formulated packages. In this its nearest rivals are probably Chemtura and BASF. Chemtura is being acquired by Lanxess and folded into its Rhein Chemie subsidiary to create an antioxidant powerhouse, but that seems unlikely to challenge Evonik’s footing in V.l. improvers and pour point depressants.


Senior Scientist Stefan Maier elaborated: “The key features we sell (and most of our products have at least one of these) are dispersancy, pour point which essentially means preventing wax crystals from growing and gelling in the oil—and V.I. effects. All come from our understanding of monomers and how to use them to build up useful polymer chains.” High viscosity base fluids are also part of the arsenal.


Other V.I. chemistries exist, mostly based on hydrocarbons like styrene­diene and ethylene-propylene copolymers, Maier said. “But it’s very important co be able to control the distribution of chain lengths and molecular weights, and that’s what enables us to create things like a polymer comb structure and others.”


Evonik is the successor to a long history of companies and brands, he reminded, and the company’s polymer chemistries have their roots in methacrylic acid (MMA, the monomer invented by Otto Rohm in the 1920s from which Plexiglas is made). Predecessors like Rohm and Haas in Germany and Rohm US spearheaded the use of poly alkylmethacrylates (PMAs) as V.I. improvers and pour point depressants in the 1940s, and followed up with dispersant PMAs in the 1960s.


Oil Additives’ sales now are split roughly evenly among the Americas, EMEA and Asia. It has five production sites (Darmstadt; Morrisburg, Canada; Houston; Lauterbourg, France; and Singapore), and plans to add a process unit in Weiterstadt, Germany, to make comb-type polymers. Major R&D facilities are in Darmstadt, Horsham, Pennsylvania, and Tsukuba, Japan, while a product development lab in Shanghai supports customers in China.


“Generally, you have to admit that lubricants is not a sexy market, if you just look at growth rates alone,” commented Ralf Duessel. “But our main competency is in the V.I. improver market, and that’s about a 2 billion euro market annually.


“The lube additives market overall is forecast to grow one to two percent a year,” which is twice the rate of the overall lubes market, he continued. “But we see the potential for higher growth, especially where energy savings is the driver and we can show a performance advantage, such as with Nuflux [base stocks] for wind power and general industrial gearboxes, and our Dynavis technology.” (The latter is a proprietary specification for higher performing hydraulic fluids; it revolves around the benefits of using high V.I. fluids.)


Duessel likens the business’s growth strategy to a triangle: One facet involves creating demand for lubricant customers’ products by working with OEMs on technical advances and approvals; another is broadening the scope of current products; and the third is investing in plants, technology and people. “Everything can fit into the triangle,” he declared, “but it takes time. The approach we’ve used with Dynavis can take six to eight years to bear fruit. We spent that time going to trade shows, conducting field trials and supplying sales support to show the performance gains. We don’t talk with OEMs and customers about chemistry, but about efficiency and performance.”


About 10 years ago, related Stephan Fengler, Evonik set out to create an innovative space for its various R&D groups to connect their polymer knowledge, while keeping product develop merit front-of-mind. That effort led to the creation of “competence centres,” which can bring in technologies from other sides of the company. The FriMo Competence Centre, for example, focuses on friction reduction and machinery endurance.


“Step one was to look at what technical competencies we have in our groups,” Fengler said. “Doing that, we identified six key technologies that cover 80 percent of our operating business segment.” These are polymers, “interfacial technologies” (i.e., emulsifiers and dispersants that attach and impart surface properties); coating and bonding adhesives (which involve surface film formation); biotechnology; catalytic effects; and inorganic particle design.


After tracing the parallels among the competencies, the next steps were to set priorities, fund and invest, and deliver resources that can result in new products. “Now we can use those networks to bring people together, to find solutions for our business lines,” said Fengler. “So at Oil Additives, we’ll be going beyond polymers alone.”


It may sound ivory-tower, but it’s grounded in pragmatism, Duessel indicated. “At the end of the day, products need to be marketed and supplied.”


FriMo Competence Centre head Guenter Schmitt, who has responsibility for its creative pipeline, finds the challenge energizing. “I love chemistry and love getting to transfer that knowledge into products,” he said with contagious enthusiasm. Schmitt joined Evonik in 1990 as a paper technology chemist, worked as commercial manager for road-marking additives, moved into coatings and adhesives, and then took up his current role at Oil Additives in January 2016.


Rather than look at polymers alone, he said, FriMo’s scientists will examine fluid systems and surface designs. “Energy losses through friction are enormous,” Schmitt said. “About 15 to 20 percent of the energy used each year goes just to overcome friction. So there’s great need for products that can reduce that energy loss.


“Fluid systems may mean new additives, not just polymers. Nanoparticles could give wonderful effects, so we’re asking if there is something that is really comparable to current fluids. Surface design may come up with new processes to create fluids, perhaps a balance between adhering and surface films. And nanoparticles are already in our sights, as we’re researching a family of nanoparticles made by our sister company in Hanau, Germany.”


Schmitt also plays ambassador to other Resource Efficiency business lines, to prod their interest. “Internally, we’re talking intensely with our colleagues in polymers, in silanes (which are mostly sold now into coatings), in coating additives and in inorganic particles. We’re going across business lines to find what may have potential as oil additives.


“The motivation for these businesses to participate is that we are visible to the market as Friction and Motion,” Schmitt continued. “So if we develop something together, they’ll get sales into a new market for them, I feel there’s a lot of motivation to move to this kind of system thinking. It’s not only about the technology they have, but about how to bring it to the right commercial application. We need to find that focus on where a business opportunity exists, and then go after it together.”


While FriMo is generating a buzz right now, Evonik has additional growth initiatives underway. One is the Evonik Venture Capital Group, which is investing more than 100 million euros in new ventures such as the bio-derived base stock manufacturers Bio-Synthetic Technologies and Algal Scientific.


“Nano is another strong area, although right now it’s another tool, not a full replacement for lubrication,” Duessel said. “We also see the base oil demand shifting from API Group I to II and Ill, which isn’t always beneficial. Group II and III don’t have the same synergies for making greases and metalworking fluids, for example, so there may be an opportunity to solve that issue.”


Hypothetically, Evonik could acquire other additive companies, as well. “It would need to be a company that is strong in specialized technology for oil additives, and not a producer of commodity products like detergent-inhibitors,” Duessel mused.


Meanwhile, FriMo is priming the pump with ideas and concepts. For example, a patent has already been filed on a new and very stable way to disperse metal oxides in oil. Will successes like that have Evonik’s other businesses knocking on Oil Additives door?


“First, we have to convince the other business units there will be future business and sales,” Duessel said. “They are going to be driven by potential. We cannot put a return yet on FriMo, but we can on specific projects—and if we are the route to market, they’ll be happy to join in.”