Rhodia hopes new structure reflects cost effectiveness

13 January 2003 20:46  [Source: ICIS news]

PARIS (CNI)--Rhodia hopes its new structure announced Monday will reflect its strategy of cutting fixed costs and increasing its cost effectiveness, according to executive group vice president Jean-Julien Baronnet.

The group, which has been afflicted by falling shareholder confidence and has spent the last year divesting businesses to reduce debt by Euro500m ($525m), has adopted an approach, through its new four-division structure, to customise its products through customer alliances and cross fertilisation of its technology base.

Rhodia hopes that the strategy, which has been developed since 1998, will enable the group to generate 75% of its research and development (R&D) plans through customer partnerships. It aims to increase innovation, and be "a champion in functionality" as opposed to being a champion in technology.

The new business structure has been designed to ensure that Rhodia focuses on providing a multi-market fit, meaning that applications designed for one particular market segment can be used in other functions.

Baronnet said the group will "no longer refer to products but to functionality".

In short, the French specialty chemicals company sees its place in the market as a provider of high added value in a eight key strategic markets: consumer or personal and home care with 25% of the group’s activity; industrial surface care with 31%; electronics and electrical at 3%; automotive with11%; fibres at 14%; food with 7%; pharmaceuticals at 6%; and, agriculture with 3%.

These eight strategic markets were selected from 350-400 potential market segments by a criteria focused on customer need and the uses of the innovation while based on the economics of return on research.

Baronnet said Rhodia’s portfolio satisfies these needs and will enable it to cross-fertilise its technologies to meet customers’ needs.

For example, silicon products could be used in five markets, and in each market its technology would have several different capabilities. In the consumer personal and home care market, silicon would be used to provide softness for baby products. In the automotive business, however, silicon would be used to provide waterproofing or anti-scratch paint. And in the agricultural market it would be used to reduce foaming.

The eight markets will be served by nine key functionalities: surface and interface treatment; control properties of liquid systems; controlling the properties and processabilities of powders; control of the physical properties of solids; reinforcing materials; control release of active ingredients; protection and barrier effect; high purity treatment; anticipation of health and environmental constraints.

Rhodia estimates a 20% increase in new products (less than five years old) being brought to market as a result of the restructure.

Baronnet admitted that Rhodia’s new structure has involved a cultural change within the organisation. Personnel-wise, the four division heads - Andre Blazquez in automotive, fibres and electronics, Jean-Pierre Clamidieu in pharmaceuticals and agrochemicals, Jacques Becuwe in industrial care and services and Michel Ybert in food and consumer care - will be backed by eight enterprise managers, who will co-ordinate and represent Rhodia in its markets.

In addition, market innovation directors, who will express market needs in scientific terms and manage day-to-day activities, will back the enterprise managers.

In terms of a breakdown of the divisions into businesses - the new automotive, electronics and fibres division will include technical fibres, engineering plastics, polyamide intermediates, the Nylstar joint venture and electronics and catalysts. It will cater mainly to the automotive, fibres and electronics markets. Pharmaceuticals and agrochemicals will include the pharmaceutical solutions, perfumery and performance & agricultural businesses.

The industrial sector will be covered by the industrial care and services division, which includes silicones, silica systems and ecological services.

Finally, the food and consumer sectors will be the main focus of the food and consumer care business, incorporating food, specialty phosphates and acetow.

Financial targets for each of the divisions will not be divulged until Rhodia announces its 2001 full year results.

Baronnet said that although the changes are not massive structurally, Rhodia has changed its customer management and its objective is to now achieve the best synergies and thus serve clients more responsively.

By: Joanna Kesteven
+44 208 652 3214

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