Akzo Nobel to cut plants in 'far-reaching integration'

06 March 2000 00:00  [Source: ICB]

Akzo Nobel is considering cutting the number of its coatings manufacturing sites from 60 to around 20 as it continues the integration of its coatings businesses.

An offensive and defensive restructuring is how Akzo Nobel chief executive officer, Cees van Lede, describes the 'far-reaching integration' in prospect for 2000 and beyond. 'On the defensive side are cost savings. Our size now permits us to specialise our production in certain locations. The first thing we are doing is to split the sites between industrial and decorative products. The second will be to reduce substantially the number of locations to benefit from manufacturing on a European scale.

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'On the offensive side we have to have an integrated marketing approach. The European Union has taken away borders and the euro makes our prices transparent. We have to have an integrated approach to sales, marketing, branding, advertising and merchandising. The aggressive part is to eat market share from others - not through price competition, but by being more effective, said van Lede.

Acquisitions, probably in emerging markets, are in prospect, and these in conjunction with organic growth in these regions will increase sales. The Courtaulds acquisition gave an important network in Asia. In Turkey, Akzo Nobel's Marshall Boya is struggling to keep pace with the demand for paint following the earthquake.

In 1999 Akzo Nobel's volume growth in coatings was only 2%. In developed markets demand is growing only at GDP levels and in developing countries the potential for volume growth is very much higher.

'Europe is a very competitive market,' van Lede added (see also pages 20, 21).

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