Transcript Ona Polymers, LLC

Shortages in the Specialty
Chemical Industry
Chris Kawaja, Principal
Shortages
 PART 1: Why?
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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
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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
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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
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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
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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
 ICIS Pricing and News
www.icispricing.com