The Chemical Company's long-term view sustains relationships

27 January 2014 00:00  [Source: ICB]

When the owners of a mid-size, family-run company can say they are still doing business with the original principal suppliers that helped start the business 25 years ago, they have every right to be proud. Such is the case with The Chemical Company, a chemical distribution firm based in Jamestown, Rhode Island, US.

“The reason,” explains Robb Roach, president and second-generation family owner, “is the company’s philosophy,” established by Robb’s father, Nick Roach, when he founded the business. “We establish partnerships with our suppliers by investing in our relationships.

The Chemical Company

The Chemical Company

The Chemical Company has expanded business scope, while maintaining focus on ­environmental ­performance

“We are not so big that their products get lost in the mix. Our expenditures for advertising, web presence, industry trade shows, systems training, HSE training and direct sales grow as we grow. The rewards that we reap from those 
investments also benefit the producers that partner with The Chemical Company.

“We take the long-term view in our business dealings. We focus on supporting knowledgeable sales professionals and introducing new talent that can offer technical support for our customers.

“We do not have turnover or cut costs on customer service. Our Customer Service Experts (CSEs) are among the best in the industry, and they are always available to help. Our goal is to promote products from our producing partners, and focus our efforts on building long-term relationships with customers.”

Roach emphasises the stability of The Chemical Company’s strong financial base and the importance of the company not being leveraged or up for sale. “We have always enjoyed long-term positive growth. We have been consistently profitable, with a stable financial base.”

The business, with current annual sales of $85m (€62m), was established in 1988, offering intermediate chemicals to resin producers in the polyester, urea formaldehyde and phenolic resins industries. Nick Roach set up the company after gaining experience in the fuel and oil business, working for some time at Gulf Oil.

COMPANY FOUNDER STRESSES COMMITMENT

For The Chemical Company founder Nick Roach, the defining characteristics of the company are that it is employee-driven and that it offers a long-term commitment to its customers that they will not experience change.

Nick Roach

Nick Roach - Founder

“Our early suppliers were the forerunners of what are now Yara International and Methanex,” explains Robb Roach. The Chemical Company still sources nitrogen-based ­chemicals and methanol from these companies, which have grown to be major players in the global market. “Indeed,” he adds, “we continue efforts to expand with our founding partners, as well as establishing relationships with additional, well-chosen principal suppliers.”

The process of expansion and growth over the past 25 years sees The Chemical Company now active in several main areas including: crop nutrition and performance additives; polymer additives, notably plasticisers, bio-cides and flame retardants; and acids such as citric, malic, fumaric and succinic that are destined for both the technical and food ingredients sector. New lines, including bio-based materials like succinic acid and its esters as well as arsenic-free biocides are being developed to take the business forward.

“We started with a handful of suppliers and they are still with us today”, he says proudly. “That speaks volumes about us – the relationships that are established are long-term relationships.”

He notes that the company receives a steady stream of inquiries about purchasing the company – often several a day – but maintains that “it is not for sale”. The company, he says, “owes something to its employees and I have no intention of selling out; I will retire.”

Succession planning has seen his son Robb join the company and prove to the sales team that he is capable of taking on the management role. More importantly, says Roach Sr, he is dedicated to carry on the same principles of doing business. “I don’t have any issues that he will not continue with the same principles of business that the company was founded upon.”

“What really sets us apart from the competition is our approach to the market and our employees,” explains Robb Roach. “We have built the business along personal lines, making sales calls, having face-to-face meetings and sharing information. We take a technical and personal approach to sales, and can often save our customers money by improving formulations and helping them find new products.” The result, he says, “is that The Chemical Company has become an important partner to its customers”.

The market, he adds, is always changing. Over the years he has seen a shift from domestic US sourcing to international supply in the chemical industry. “We have made the transition very well. We are now sourcing from low-cost areas of the globe to keep our customers’ costs down and ensure that they stay ahead of the trends.”

Roach notes that his company looks to US sources first. But The Chemical Company has been sourcing materials from China, from the company’s base in Nanjing, for more than 10 years. Other producing partners reside in Europe, and in Latin America, where the company has an office in Cali, Colombia. Sourcing from those areas continues to increase, he adds, and the company’s procurement team is always looking at other low-cost regions for new opportunities as well.

European producers have been a regular and trusted source for The Chemical Company. They can be competitive on cost for a broad range of chemicals, he says, due to the efficiency of integrated production in the region. Also, “the market there is currently very slow, opening up export opportunities and arbitrage is possible.”

In China, Roach says that he is seeing higher prices. It is no longer the lowest, most competitively priced region. “It’s not the best source for everything. The trouble is that in the past, Chinese producers have pushed others out of certain businesses and global raw material producers have given favour to this market. The recent changes in China are a concern for us and we have been keeping our customer base informed of changes.”

Xiao Zhang, The Chemical Company’s China procurement manager, comments: “We have been operating in China for 10 years, and our producing partners have enjoyed good growth through our distribution channels. We know how to deliver quality Chinese products to their markets safely and efficiently.”

A big part of the company’s technical sales effort and its customer service is its open approach to information sharing, adds Roach. Through its technical sales personnel and its regular market newsletter – The View from Jamestown – it gives balanced, real information on news, markets and products, and not just the company line; “sometimes to our detriment,” he adds.

Many producers, he notes, only give their own viewpoints, but “we want to report an accurate picture.” By keeping abreast of the news, economy and technical trends, “we can offer a great deal of information that can create opportunities that are advantageous to our customers and producing partners.”

In terms of customers, The Chemical Company’s main focus is North America and then South America. There are some sales back to Europe but they are a small part of the business.

The outlook for the US market is “exciting”, says Roach, due to the benefits to be gained from low cost energy and feedstocks from shale fracking. “We are already seeing some new business in hydraulic fracturing –but the up-stream resources will obviously take time to hit the market.” In the medium term, over the next five years, he is very positive about the US market. “We know growth is coming because of cheap energy and good availability of raw materials.”

 CUSTOMER FOCUS IS EVERYTHING

“Customer focus goes from top to bottom at The Chemical Company”, says Kerri McNamara, office manager in charge of the team that services customers’ orders and needs, deals with suppliers, and looks after the logistics of getting product from warehouse to customer.

Kerri Mcnamara

Kerri McNamara - manager

“It’s all about relationships,” she adds, “and the long-term experience of our customer service experts. We have continuous training and expertise in safely handling the most benign to the most dangerous goods. And our sales and procurement staff is technically proficient in so many different applications.”

This has helped, she adds, because many of them have sat on the other side of the table, as purchasing managers in the industry, for example. “This gives us a unique advantage.”

The customer service department is the last line of defence for the company, she notes. “It’s important to have a good customer service department – with people who are always available, work hard and are engaged.”

In addition, Roach sees a lot of growth potential in the fertilizer and crop nutrition sector, which is undergoing a great deal of change at the moment with major US ­investment in ammonia, and the drive to make crop nutrition more effective on application. “We intend to stay on top of the trends – it’s not just ammonia and urea but more specific nutrition products”, he says.

Equally, he sees changes in regulation in a number of sectors as offering potential increased sales. Here, he points to controls on biocides, certain plasticisers and brominated flame retardants as opening opportunities for alternative products. “There’s a lot going on now with government mandates and selection of products, and we are offering a lot of alternatives for this. We are also offering products that are ­bio-based and made from ­renewable resources.”

The Chemical Company has, for instance, partnered with Myriant to distribute bio-succinic acid from its 30m lb/year (13,600 tonne/year) facility that was recently brought on stream in Lake Providence, Louisiana.

That The Chemical Company, with only 30 employees, offers such expertise is testament to the people it employs and the contact they have with the market. The company has resident experts in each sector to attend trade shows and events and stay in touch with developments and customers, “with no expense spared.”

Of these 30 staff, a dozen are customer service experts based in the Jamestown office who deal with customer orders, queries and logistics management, while the rest are sales and marketing staff with technical expertise. These, adds Roach, have good support from their principals. “We are certainly not traders – we stick with our suppliers through thick and thin and deliver them reliable sales across a diverse customer portfolio. Our people have a long history of chemical experience and many have worked on the producer side before they joined us.”

And what of the future? The company’s five-year plan envisages growth coming both from the industries served at the present, complemented by continued development of the product offering and the number of cost-effective partners worldwide. “But it will not be growth for growth’s sake,” asserts Roach. “This is a dangerous approach and we will not be making acquisitions or taking on debt. The aim is organic growth.”

BIO-BASED MATERIALS ON THE UP

The bio-based chemical craze is no longer simply theories, models and speculations. There are actual plants producing chemicals from renewable feedstocks and The Chemical Company is on the forefront of this movement.

The Chemical Company is offering products and solutions to its customers to reduce carbon footprint and move away from petroleum-based feedstocks – hedging risk from raw material volatility. The Chemical Company has partnered with Myriant to distribute bio-based succinic acid. It has contributed with market knowledge and product expertise to develop new applications for bio-based succinic acid and derivatives.

The Chemical Company is working directly with its customers and partners to use environmentally friendly products in their processes. It supports green initiatives by attending industry symposiums/conferences/tradeshows and keeping up with evolving regulations on the different sectors it serves.

NEW HEADQUARTERS BUILDING BRINGS BENEFITS

The Chemical Company has completed the construction of its new worldwide corporate headquarters. This new, state-of-the-art facility is less than a mile (1.6km) from the old facility.

It was designed from the ground up to fit the needs of The Chemical Company, its customers and the future. It features a secure, disaster-proof IT facility, voice-over-IP telephony system, video conferencing, perimeter security and a high-definition video surveillance system throughout the entire campus.

The Chemical Company HQ

The Chemical Company

The new office is ideal for a customer-centric, future-looking business approach

There is a multiple-generator standby power back-up system, and the building comes complete with kitchen, gym, campus and WiFi network, to name just a few of the main features.

The company’s unified application platform provides unparalleled access to order tracking, shipment tracking and real-time inventory management worldwide on any internet connected device to provide the highest level of customer service.

The Chemical Company has also begun the process of upgrading its ISO system to 14001 and including Responsible Care. This is scheduled to be completed in 2014.

The Chemical Company is and always has been committed to continuous improvement in health, safety and environmental performance.

SUPPLIERS WELCOME LONG-TERM, PROFESSIONAL APPROACH

“We view The Chemical Company as a perfect fit to represent us as a marketing arm in the US. Their large, professional sales staff covers the entire US, Canada, and Latin America. Their sales staff is more than just a sales staff – they are a group of industry experts with hundreds of years of combined experience. It is important for us to have a dedicated team of experts represent them in the marketplace.

“It is essential to have skilled sales reps constantly in front of customers promoting our products and discussing current market trends. The market information we are able to gather from The Chemical Company’s sales staff is invaluable, making us a better, more informed supplier.

“Their team is able to go above and beyond the usual sales call. I find value in the fact that their marketing team is able to draw from their experience and find creative solutions for customers.

“Aside from the large skilled marketing team, The Chemical Company also has an experienced, pleasant, multilingual team of customer service experts at their Jamestown headquarters. It is important to have a large customer serve staff to handle a large volume of customers, while maintaining a personal touch with each.”
European producing partner

“The Chemical Company is family owned and operated, and the core family values of honesty, loyalty and trustworthiness radiate throughout their business. When meeting with the company (whether at their Jamestown headquarters, or elsewhere) I am welcomed and feel as if I am part of the family. This is welcomed change from the typical stuffy corporate environments.

“The Chemical Company is long-term oriented and financially conservative, and I am confident that they will be around for a long time to come. We prefer to align ourselves with companies who we strongly feel will continuously represent our brand in a professional manner.”
North American producing partner

LEADING BUSINESS UNITS DRIVE GROWTH

  • Polymer additives

The Chemical Company has been a consistent and reliable supplier to the polymer additives industry since its beginning.

In 1998, Oxeno, a division of Degussa (now Evonik), contacted the company to form a partnership to market its diisononyl phthalate plasticiser in the US, which gave The Chemical Company an introduction into the polyvinyl chloride (PVC) compounding industry.

Since that beginning, with oversight from plasticiser manager Forest Goodman, and the targeted acquisition of some of the most knowledgeable sales and technical professionals in the industry, The Chemical Company has grown its product offering substantially by teaming with several major US and international suppliers.

Although the phthalate plasticisers remain The Chemical Company’s workhorse products, Goodman says that the company is expanding its line with non-phthalates with an emphasis on renewable and bio-based products which are being driven by consumer awareness and demand.

AJ Petrarca manages The Chemical Company’s basket of fertilizer products and has helped grow that line into much more than it once was.

crop spraying

The Chemical Company

Success comes from a clear understanding of the latest trends in each business unit

Petrarca attributes the growth of the fertilizer line to staying current with today’s agricultural practices by attending trade shows and visiting his customers often.

Having started with offering urea from Yara, The Chemical Company’s fertilizer line not only includes nitrogen, potassium and phosphorus products, but also micronutrients that are essential to increasing crop yields.

Petrarca also says that by working closely with suppliers and customers, the company is able to put together an effective strategy well before the season to ensure success for all.

  • Acids/alkali

Another line of products that has contributed to The Chemical Company’s growth is acids and alkalis. Jim Cahill, who manages this line, says success has come from the ability to offer customers an array of products in this category.

The company has grown its acids and alkali list into an impressive line carrying beverage acidulants, water treatment chemicals, chemical intermediates and fertilizer products, to name just a few of the applications that they serve.

Cahill, a retired purchasing manager who joined the Chemical Company almost a decade ago, adds that knowing the needs of the customer has helped grow the acids and alkalis product list into what it is today.

Cahill points out that when he meets with customers, he is able to offer them multiple acids and alkali, bringing added value to his customers.


By: John Baker
+44 20 8652 3214



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