Rhodia Urges Price Initiatives For Long-Term Health and Viability

24 March 2003 00:00  [Source: ICB Americas]

With staggering raw material bills besieging the global specialty chemicals industry, Rhodia has taken a front line position in expressing the industry's urgent need to implement price increases for its long-term health and viability.

"The present situation is not sustainable in the long run," said Rhodia chairman and chief executive Jean-Pierre Tirouflet in an exclusive interview with CMR. "If this situation lasts, it will result in a contraction in capacity and eventually a very sharp rise in prices in the coming years."

While the price of crude oil has backed off to the low $30 per barrel range after approaching $40 just weeks ago, Mr. Tirouflet notes that the prices of other oil and natural gas based raw materials are still on the rise.

"The industry has to make sure that prices move up, and we are taking a leadership position in this initiative," says Mr. Tirouflet. "We're trying to explain to our good customers that it is very important for everyone to be able to make a living in the present circumstances. It is in their long-term interest that they keep reliable and loyal suppliers."

Rhodia, along with the rest of the global specialty chemicals industry, has been racing to implement numerous price increases to keep up with raw material costs.

In addition to launching price increases pretty much across the board in its automotive, electronics and fibers, food and consumer care, agrochemicals and pharmaceuticals, and industrial care and services divisions, Rhodia is structuring the pricing of new specialty products on a value-sharing basis.

"For all new specialties, we're trying to work on a different basis where we share in the value we're able to create for our customers," says Mr. Tirouflet. "If the customer improves his production process by 20 percent with our product and research, you can figure out the level of savings, and we would propose some sharing of this profit. That's the spirit of what we're doing and how we're trying to change the pricing structure of our most innovative products."

Along with sharing in the profits, Rhodia is developing more partnerships with customers where it also shares in research and development efforts.

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