Brenntag UK pushes further into chemical specialties

Moving on up

28 May 2009 17:56  [Source: ICB]

Now that UK distributor Albion's transformation is complete, the group is pushing into new areas, driven by managing director Clare Waters

WITH ITS rebrand from Albion to Brenntag UK completed in March, the chemical distributor is now concentrating on pushing further into specialties as it gains access to the wider Brenntag product portfolio.

Brenntag picked up Albion in 2006, and Clare Waters, managing director of what is now Brenntag UK, says: "Since the Brenntag takeover, we have taken advantage of their position in specialties to grow that side of the business. They operate in sectors where we can expand such as pharmaceuticals, personal care, adhesives and coatings plus oil and gas."

In an interview with ICIS at the group's depot in Greenwich, London, Waters said she had employed three new business sector managers to focus on key areas of expansion: pharmaceuticals, personal care and polymers. "As we focus on expanding our portfolio of specialties, we have concentrated on market sector management. Each of these new managers helps to link the supply side and the customer side."

To help develop this connection between suppliers and customers, Brenntag UK has implemented a new customer relationship management (CRM) system over the past 18 months. It aims to increase the flow of intelligence about market trends at the customer end to help Brenntag and its suppliers react swiftly to new requirements.

"Every time we visit a customer, we record what we learn about customer requests. This means I can spot if a real trend is emerging. For suppliers we represent a dynamic route to market through the very high number of contacts we make with customers."

Waters estimates that the group can make up to 1,000 customer contacts per week from its 10,000 live customers. Intelligence from the CRM system helps suppliers spot gaps in their own portfolios.

Waters revealed that the South Wales operation is scheduled to move to a purpose-built location by the end of 2009. "We've just got approval to relocate our South Wales depot in Swansea from an old site. We want to expand this part of the business for food and pharmaceutical warehousing."

To deliver across the whole of the UK and the Republic of Ireland, Brenntag UK has a network of 12 distribution depots (see map). These are conventional depots, delivering to customers and receiving from suppliers.

Complementing these are six specialty sites, which perform more complex functions, such as blending highly hazardous chemicals. Product from these then feeds into the distribution network.

"Our inter-depot network allows overnight vehicles to feed the rest of the country within 24 hours," said Waters.

At the Scunthorpe solvents site, bulk product is brought in by ship and truck to be broken down into smaller batches. Custom manufacturing takes place at Bradford, where blends are made up to customer requirements.

Waters sees the Widnes site as a flagship in its evolving focus on food and pharmaceutical blends in the UK and Ireland. The site incorporates a facility that manufactures dilutions of acidulants, preservatives and other ingredients at customer-designated strengths as part of its standard portfolio.

"But we have taken this a stage further by manufacturing bespoke, multi-component blends that are applied directly into production," said Waters.

This, adds Waters, is an easy way for customers to reduce inventory and take complexity out of their business.

Unusually for a distributor, Brenntag UK has what might be termed manufacturing activities. This is thanks to the company's heritage - Albion, and Hays before it, had a manufacturing arm.

At Thetford, ultralow-bromate sodium hypochloride is produced and sold mainly to water utility companies.

At Sandbach, in Cheshire, ferric chloride is manufactured for water treatment. At Halifax, colors are produced for the manufacture of dyes, plus pigments for plastics, coatings, paper and other industrial uses.

Specialty surfactants are produced in Liverpool, though this facility is expanding and relocating to Manchester. Waters said she was keen to expand Brenntag UK's specialty surfactant operation: "We have had surfactants for a long time, but mainly commodities. Being part of Brenntag gives us access to a much wider range of specialty surfactants suitable for the personal care and cleaning markets."

Waters said Brenntag UK still has operational decision-making independence from the wider Brenntag, headquartered in Germany. There is a UK and Ireland management board that meets quarterly. Steve Holland - who was promoted from Waters' post to become CEO of Brenntag Europe - is part of this group.

There is also a more hands-on management board that meets monthly to discuss the tactics needed to achieve the overall strategy.

"Growth in specialties is a global Brenntag strategy, as is enhancing service capabilities. Our customers in the UK do not have the same needs as those in Spain. But there are opportunities to work together, for example with a pan-European supplier. Also, if customers want pan-European or global reach, we can now offer that more effectively," explains Waters.

Head office will also need to approve projects and acquisitions. Brenntag globally has been highly acquisitive, and Waters said the downturn does not spell an end to that behavior: "We have been able to continue with expansion plans. If we can identify a company which adds value and synergies, we could still do that [acquisition]," she said.

Waters said there are no holes in Brenntag UK's geographical spread and would not comment on where gaps exist in its product offering. Brenntag UK is proving resistant to the downturn, said Waters. First-quarter 2009 sales were higher than the same period last year, she revealed. Being privately owned, though, Brenntag does not publish quarterly financial figures. The UK division achieved sales of around £240m ($385m, €277m) in 2008.

Waters claims customers are swapping from manufacturer to distributor in a downturn: "Customers are looking at stock levels, costs and the complexity of their business. They may swap from producer to distributor if they are looking more closely at working capital requirements. Having a lot of suppliers is expensive and complex to manage."

She said that lower demand from the automotive and construction sectors was offset by growth in the food and nutrition, personal care and cleaning sectors.

Like many, Waters ended up in the chemical sector by accident. "Having got a degree in Spanish I wanted to use my language so I joined [Spanish producer] CEPSA in London in 1989 managing transport routing. I enjoyed this, wanted to move back up North so wrote on spec to [Brenntag predecessor] Hays, where I was offered a marketing assistant role."

She says she has not encountered prejudice as a woman in this male-dominated industry, adding: "I have a passion for the chemical industry. It is interesting, demanding, challenging but great fun. I love problem-solving: it's immensely satisfying."

Specialty sites:
Thetford: sodium hypochloride
Scunthorpe: solvents
Bradford: blending services
Widnes: food and pharmaceutical blends
Liverpool/Manchester: surfactants

Manufacturing sites:
Sandbach: ferric chloride for water treatment
Halifax: colors

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By: Will Beacham
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