Ona Polymers, LLC
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Transcript Ona Polymers, LLC
Shortages in the Specialty
Chemical Industry
Chris Kawaja, Principal
Shortages
PART 1: Why?
US vs. other countries
2008 and plans for new plants
We use by-products
A bit about peak oil
PART 2: What to do?
Strategy
Sales
Procurement
Oil Consumption by Country
120
ROW
BIC
US
100
80
60
40
20
0
1960
1970
1980
1990
2000
2010
2020
1960 US %, 2010 US %, Growth/newness
2008 – Forget the new plant
Conditions awful
Is there going to be an economy? Global
meltdown
Cash first, investments later
Is oil $40, $120, or something else? How can I
plan for that?
Long planning horizon
Acrylic plant: 2-4 years
Ethylene plant: 4 years
Polymer plant: 1.5 years
Compounding of issues – won’t build unless I
can get material and make money
Controversial, but certainly price is going UP
(Source: propertyinvesting.net)
Spotlight: Butadiene
You are using by-products
Butadiene is building block of products like
SBR latex, SBS rubber, etc.
A by-product of steam cracking process
used to produce ethylene. Quantity is
related to type of feed (light vs. heavy)
2003: New Olefin cracking process gets
rolled out.
Higher oil prices means more valuable to
recapture most valuable feedstocks, NOT
Butadiene.
Shortages
Part ONE: Why?
US vs. other countries
2008 and plans for new plants
We use by-products
A bit about peak oil
Part TWO: What to do?
Strategy
Sales
Procurement
How does this impact you?
New strategy questions
Should and can I grow my business?
How do I deal with potential supply shocks?
Customer and product line priority – you may
have to choose
Do I need to be in a certain region to grow?
How does this impact you?
New sales questions
Can we support this new business?
Why are customers going to pick us over a
foreign vendor?
Customer forecasting and lead times
Should I qualify multiple products of different
chemistries?
How much should I educate my customer about
this?
How do I maintain a good relationship when all
we talk about is price?
How does this impact you?
New procurement questions
Not only price
Negotiation Synergy
Contracts for price
Appropriate inventory
What is so critical that it will shut down my
plant, or my most critical customers
How do I get ahead of the information curve
Inventory
How many vendors per item? Premium for
additional vendors
In Summary
Prices: UP
Availability: DOWN
Outlook: NEGATIVE
This is way more important than you think
Bad or good? Depends on how you manage
BUT – you MUST rethink how you go
about your business – your jobs are getting
more complicated and you must change to
win
What will you do differently tomorrow?
Ona Polymers
Manufacturer of acrylics and styrene acrylic
polymers based in Garland, TX
“Supplier of last resort” in 2010
Found out early, acted fast, paid more
Strategic customer selection
Educated customers on what and why
Plant had capacity
Global sourcing capability using Premlinx
Contacts to help you
ONA
Chris Kawaja, [email protected]
Todd Wilson, [email protected], 916770-7683
Other resources
Moiz (Mo-eez) Sherwani,
[email protected]
610-421-4222
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